In a meeting held yesterday, the Board of Directors of ScottishPower agreed to recommend unanimously that the company’s shareholders accept Iberdrola’s offer of 400 pence per share in cash and 365 pence per share in new Iberdrola shares. In addition, before the transaction is completed, ScottishPower will approve an extraordinary dividend of 12 pence per share once the transaction is complete.

The Board of Directors of ScottishPower, which has been advised by Morgan Stanley, considers the terms of the acquisition offer fair and reasonable and will make the unanimous recommendation during the extraordinary general shareholders meeting, expected to be held in the first quarter of 2007.

‘ScottishPower needs to expand its presence, diversify its operating risks, obtain greater economies of scale and have the financial strength neccesary to invest in major infrastructure projects over thecoming years,’ said Phillip Bowman, Chief Executive of ScottishPower. ‘This transaction manages to reach all these objectives avoiding the negative consequences for employees that most potential mergers would entail.

‘The combination of both companies will enable ScottishPower to develop on a global scale in a progressively more competitive environment and the terms offered by Iberdrola provide an attractive price for our shareholders.’

The merger of ABN AMRO-advised Iberdrola and Scottish Power is subject, among other things, to approval by the shareholders of both companies and be certain regulatory authorities, including the European Commission and US Federal Energy Regulatory Commission.

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