Basque utilityIberdrola initiates negotiations for merger with Renovables subsidiary

The Board of Directors of Basque utility Iberdrola, meeting on Tuesday in Madrid, agreed a proposal to the Board of Iberdrola Renovables which met in the afternoon in Valencia, to initiate negotiations for a merger by absorption of the renewables subsidiary by the parent.
Iberdrola has proposed an operation equivalent to 0.499 of its own shares for each Iberdrola Renovables share, valuing the subsidiary at 2.978 euro per share or a 16.7% premium over its average share price for the last six months.
The operation will involve Iberdrola voting in favour of the distribution of an extraordinary dividend to be proposed by the Board of the subsidiary at a shareholders meeting, provided the amount is equivalent to 40% of the stated share value of €2.978.
In the event of the dividend obtaining approval, the exchange ratio would be modified to 0.299 IberdroLA shares per subsidiary share. For this purpose, the parent company would raise capital by 246.6 million shares.
The merger by absorption proposed today by Iberdrola improves the ratio at the time of the original Iberdrola Renovables share offer in December 2007, with a premium of 2.7%, and will give existing IBR minority shareholders access to a solid stock with high liquidty and attractive dividend yield.
Through the proposed transaction, Iberdrola seeks to extract value from Iberdrola Renovables that has not been reflected in its share price since the flotation, with its continuing development as an independent business unit headquartered in Valencia. The transaction closing, following approval by the respective Annual Shareholders Meetings, is expected in July.
The world's leading wind power company Iberdrola Renovables has a presence in 23 countries and is world leader in its sector, both in installed capacity with more than 12,530 MW operational at the end of 2010, and also in production with more than 25,400 million kWh last year. The company has a market capitalization of 11,435 million euro at the close yesterday's close. Last year it obtained Ebitda of 1,456 million and net earnings of 360 million euro.

By Mónica