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Scottish Power backs Spanish bid Scottish Power backs Spanish bid
(about 2 hours later)
Scottish Power has backed a £11.6bn ($22.5bn; 17.1bn euro) takeover offer from Spain's second largest electricity company Iberdrola.Scottish Power has backed a £11.6bn ($22.5bn; 17.1bn euro) takeover offer from Spain's second largest electricity company Iberdrola.
Earlier this month Iberdrola confirmed it was in talks with the utility group as it searched for investment targets.Earlier this month Iberdrola confirmed it was in talks with the utility group as it searched for investment targets.
The tie-up will create Europe's third largest utility. Scottish Power has more than 5.2 million UK customers.The tie-up will create Europe's third largest utility. Scottish Power has more than 5.2 million UK customers.
The deal values each Scottish Power share at 777p. In 2005, it rejected a 570p a share bid from Germany's E.On.The deal values each Scottish Power share at 777p. In 2005, it rejected a 570p a share bid from Germany's E.On.
Spanish companies have been snapping up UK firms over the past year, the most recent being Ferrovial's purchase of airports operator BAA in June.Spanish companies have been snapping up UK firms over the past year, the most recent being Ferrovial's purchase of airports operator BAA in June.
Earlier in the year mobile phone firm O2 was taken over by Telefonica, while Abbey was snapped up by Santander.Earlier in the year mobile phone firm O2 was taken over by Telefonica, while Abbey was snapped up by Santander.
'Attractive' deal'Attractive' deal
The offer values each Scottish Power share at 777p. Under the deal investors will get 400p a share cash as well as 0.1646 of a new Iberdrola share.The offer values each Scottish Power share at 777p. Under the deal investors will get 400p a share cash as well as 0.1646 of a new Iberdrola share.
Iberdrola believes the combination with Scottish Power is strategically attractive Iberdrola Scottish concerns over deal
However, Scottish Power shares fell on news of the agreement, since earlier press speculation had suggested the offer could be as high as 800p a share.However, Scottish Power shares fell on news of the agreement, since earlier press speculation had suggested the offer could be as high as 800p a share.
Shares in the group slipped 7.5p, or 1.01%, to 739p in early trade.Shares in the group slipped 7.5p, or 1.01%, to 739p in early trade.
Iberdrola said the tie-up was "strategically attractive, creating a leading European integrated utilities group with a broad geographical presence and a strong platform for future growth".Iberdrola said the tie-up was "strategically attractive, creating a leading European integrated utilities group with a broad geographical presence and a strong platform for future growth".
The offer could trigger rival bids from French utility EDF and German rival RWE, who have been watching the situation.The offer could trigger rival bids from French utility EDF and German rival RWE, who have been watching the situation.
Earlier this month Scottish Power said profits for the six months to 30 September had jumped 77% to £483m.Earlier this month Scottish Power said profits for the six months to 30 September had jumped 77% to £483m.
The utility firm is made up of four divisions - Energy Retail, Energy Wholesale and Energy Networks in the UK and PPM Energy in the US.The utility firm is made up of four divisions - Energy Retail, Energy Wholesale and Energy Networks in the UK and PPM Energy in the US.
It has electricity generation and gas storage facilities in the UK, US and western Canada and is Britain's biggest generator and developer of wind energy.It has electricity generation and gas storage facilities in the UK, US and western Canada and is Britain's biggest generator and developer of wind energy.
Iberdrola itself is a specialist in wind power and has operations in 28 countries.Iberdrola itself is a specialist in wind power and has operations in 28 countries.