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Enel gets Endesa a year before planned

ITALY'S biggest power company, Enel SpA, will gain full control of Spain's largest hydropower producer, Endesa SA, after agreeing to buy a 25-percent stake from Acciona SA for 11.1 billion euros (US$14.2 billion).

Acciona and Enel, which together bought the Spanish utility for 42.5 billion euros in October 2007, are ending their joint venture a year early. Enel will secure control of Endesa, which has plants in Latin America and Europe, while Acciona gets cash and becomes the world's second-largest renewable energy provider,

Acciona will receive 9.6 billion euros and 2.9 billion euros worth of Endesa's renewable energy assets, with the remaining 1.5 billion euros coming from an early dividend from Endesa, Enel said yesterday in an e-mailed statement, Bloomberg News reported. This gives Enel a 92-percent stake.

"We have resolved a situation of instability in our relationship with our partners," Chief Executive Fulvio Conti said in Rome yesterday. "Now we have a path to organize growth, tapping our competence and our geographic expansion."

Under the original terms of the acquisition, Acciona had an option to sell its interest at 43 euros a share from March 2010.

"Enel always wanted to get Endesa but wasn't allowed to do so without Acciona's help," Antonio Lopez Silvestre, a Madrid-based utilities analyst at Fortis Bank SA, said yesterday. "It will now get it a year before planned."

Enel, which became Europe's most indebted utility when it bought Endesa with Acciona, said that it will fund the transaction with 8 billion euros in loans from 12 banks.

The cost of servicing their debt this year will be close to that of last year, Conti said yesterday. Conti also said that Enel expects to retain its current credit rating.

Enel will collect 4.2 billion euros from its share of the early Endesa dividend.

Enel was originally saddled with 55.8 billion euros of debt after the original takeover and succeeded in cutting the debt to 51 billion euros by September 30 through asset sales.

This deal will cause Enel's debt to rise again by 11.7billion euros.


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