E
F
Y
Corporate changes since 2007
Iberdrola completed the takeover of Scottish Power in 2007 for €17.2bn but its activities in Europe remain concentrated in UK and Spain. An attempted takeover of Iberdrola by EDF in 2008 was strongly resisted and was abandoned in September 2008.
In October 2008, Iberdrola completed the friendly acquisition of US utility Energy East, a deal first announced in June 2007, but delayed by the process of getting regulatory approvals from the states (Maine, New Hampshire, Connecticut and New York) involved. The deal cost Iberdrola €6.1bn made up of €3.2bn in cash and the rest in debt.[1] Energy East is the parent company for New York State Electric & Gas, Rochester Gas & Electric, Central Maine Power, Connecticut Natural Gas and Southern Connecticut Natural Gas. In addition to electric transmission and gas pipeline and distribution assets, the company has 1.8 million electric utility customers, 920,000 gas customers and 555 MW of generating capacity.[2]
Corporate Structure
Iberdrola has a much more geographically spread set of businesses than the other companies and has the highest proportion of activities outside Europe of any of the seven major companies (see Table 17). It is difficult to make comparisons with previous years because major acquisitions, notably Scottish Power and Energy East have been added, while the non-energy activities outside Spain are no longer separately identified and the Mexico-Guatemala division has shrunk significantly.
The Future
In the UK, GDF Suez has formed a consortium with Scottish & Southern Energy and Iberdrola (owner of Scottish Power) to build plants in the UK. Sites in the UK are being auctioned and by July 2009, this consortium had not bid successfully for sites although the consortium had not withdrawn from the process.
Table 1. Iberdrola operations by division (€m)
|
2007 turnover |
2007 operating profit |
2008 turnover |
2008 operating profit |
Spain liberalized |
4763 |
747 |
7110 |
1090 |
Spain regulated |
1739 |
705 |
1586 |
763 |
Spain non-energy |
2029 |
348 |
2232 |
211 |
Renewables |
895 |
351 |
1888 |
712 |
South America |
1087 |
404 |
1189 |
418 |
Mexico-Guatemala |
5183 |
874 |
2263 |
268 |
Scottish Power |
- |
- |
7978 |
936 |
Energy East |
- |
- |
952 |
31 |
Non-energy |
1771 |
282 |
- |
- |
Total |
17468 |
|
25196 |
|
Source: Iberdrola annual report and accounts, 2008. http://www.iberdrolainforme2008.com/UK/index.php
Reflecting it positioning as a renewable-led company, most of its capacity under construction in Western Europe is not fossil-fuelled (it is building an 850MW pumped storage station in Spain) and it is a major builder of on-shore wind power in the UK (see Tables 5 and 8).
There is little reference to its nuclear capabilities (in Spain) or Carbon Capture and Storage. It makes a strong case for its renewable credentials. Its web-site states:[3]
‘We are leaders in the challenge involving more efficient and environmentally-friendly energy sources, with a commitment to service quality and supply guarantee. This leadership contributes to the growth of our businesses in Latin America and the United Kingdom, the development of the renewable energy business and the international expansion of our engineering and real estate business.’
Iberdrola’s debt to turnover ratio is by far the highest of the Seven Brothers, mainly as a result of its acquisition of Scottish Power and Energy East (combined cost €23.3 compared to total net debt of €29bn). This does not seem to concern the credit rating agencies and Moody's rates Iberdrola ‘A’ with a stable outlook. Nevertheless, Iberdrola is carrying modest measures to reduce its debt. It is cutting investment and is raising €2.5bn by sale of assets, for example, its stake in wind-turbine maker Gamesa.[4] It also raised €1.325bn in June 2009 via a new stock issue. Spanish nuclear decommissioning funds are fully segregated and Iberdrola has no access to them.
- [1] Energy Business Journal ‘Energy East Corporation; Iberdrola S.A.; Iberdrola Completes Friendly Acquisition of Energy East’ October 3, 2008
- [2] Platts Power Market Week ‘Iberdrola completes $9.1 billion acquisition of Energy East, with investments to come’ September 22, 2008
- [3] http://www.iberdrola.es/webibd/corporativa/iberdrola?IDPAG=ENWEBCONLINEA
- [4] Breakingviews ‘Take cover’ June 17, 2009