EU approves Scottish Power sale

Spanish utility Iberdrola has received the European Commission nod to proceed with its proposed takeover of FTSE 100 giant Scottish Power in an agreed £11.6 billion deal creating Europe’s third-largest utility.

The deal signals ongoing consolidation in the European utility sector, driven by high energy prices and a relaxation of takeover rules by European governments.

Glasgow-based Scottish Power, the fifth-largest UK energy supplier, has oft been mooted as a takeover target and spurned an offer from E.ON only last year. As for Iberdrola, the Scottish Power deal leaves it second only to EDF and E.ON among Europe’s biggest utility behemoths, and should make it easier for the group to merge with another Spanish utility, since it will now be subject to European regulators likely to take a broader view of moves to build a dominant stance in the Spanish market than would local regulators.

A statement from the European Commission read that ‘after examining the operation, the Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area or any substantial part of it’.

A dissident voice amid the throng was the Scottish National Party (SNP), which had hoped the Commission would launch a full inquiry on concerns Iberdrola may have benefited from what it viewed as unfair tax subsidies by the Spanish government.