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Qatar paying 2.2 bln euros for 6.2 pct of Iberdrola

Stake sale comes from capital hike, treasury stock; Iberdrola to issue 338 mln shares at 6.63 euros each; Sale further dilutes core shareholder ACS; Iberdrola to buy back 247 mln shares for Renovables buyout; Iberdrola shares up 2.4 percent

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March 14, 2011 3:45 by



Qatar will buy 6.16 percent of Iberdrola SA for 2.2 billion euros ($3 billion), helping the Spanish utility finance its Brazil operations and further diluting unwanted suitor ACS.

Iberdrola, saddled with 24 billion euros of net debt, said on Monday it would issue 338 million new shares and sell them plus treasury stock at 5.63 euros each to Qatar Holding, the Gulf state’s sovereign wealth fund.

“We believe the market will look upon this capital increase as a defensive move of … Iberdrola against the entrance of ACS in its shareholding structure,” broker Mirabaud said in a note to investors.

Spanish builder ACS holds about 20 percent of Iberdrola and has said it plans to purchase more shares in its drive to win a seat on the utility’s board, which it is also fighting for in the courts.

Qatar has now become a bugbear for ACS’s expansion plans on two fronts. The Qatar sovereign wealth fund also took a 9.1 percent stake in ACS’s other buyout target, German builder Hochtief.

The share issue, priced at a 5.5 percent discount to Friday’s closing price, will dilute Iberdrola shareholders by 5.81 percent. The remaining 0.35 percent of Iberdrola promised to the Qataris will come from treasury stock.

Iberdrola shares gained 2.4 percent, outperforming the Spanish stock market and defying analyst expectations that the stock would fall on news of the dilution.

“I think this is a case of sell on the rumour, buy on the news. The market was expecting moves to dilute ACS, but this one also gives Iberdrola a potent core shareholder who will defend its management’s interests,” a Madrid-based broker said.

INVESTMENT OPPORTUNITIES

Iberdrola also said it had cancelled a 247 million share issue announced last week to finance its all-share bid for outstanding stock in its Iberdrola Renovables unit, and will instead buy back the shares on the market.

Brokers said news that the share issue is being replaced by a buy-back was also supporting Iberdrola’s share price.

Iberdrola aims to repurchase the 20 percent of Renovables it listed in 2007, offering shareholders one of its own shares for every two they own in the unit.

Iberdrola said in a presentation it had agreed with Qatar Holding to explore investment opportunities in Latin America, where it recently bought Brazilian utility Elektro.

The Spanish utility spent $2.4 billion to buy Elektro, which it wants to merge with its 39 percent owned NeoEnergia affiliate in a society where it has a controlling stake.

On Monday Iberdrola said it needs 3 billion euros in additional financing to complete its Brazilian investment goals and complete the Renovables buyback.

The Qatar stake in Iberdrola is the latest in a string of Spanish investments by Gulf States.

Qatar, flush with cash thanks to abundant natural gas resources, recently committed 300 million euros to buying into Spain’s troubled savings banks sector.

Abu Dhabi also said it will invest in a Spanish savings bank and its IPIC investment corporation bought out Spanish oil company Cepsa in a $5 billion deal in February.

By Jonathan Gleave

(Editing by David Holmes)



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