Endesa, Spain’s largest electricity utility, has revealed that it has started negotiations with one of its main rivals, Iberdrola, aimed at a friendly merger of the two companies. Between them the two utilities represent 80 per cent of the Spanish power market.
Endesa, which has a portfolio of thermal power plants, is judged by analysts to be a good match for Iberdrola which is Spain’s largest hydroelectric generator. Together, the two companies would create one of the five biggest in Europe. Iberdrola has been judged too small to compete effectively in a pan-European market alone.
Any merger between the two would be likely to fall foul of Spanish and European monopoly regulations. In order to avoid this, the companies are expected to propose a number of divestments. The Spanish Economy ministry has indicated that it would oppose a decrease in the number of generators in Spain but this has left open the possibility of the merger’s going ahead provided new companies enter the market at the same time.