Bidders line up for E.ON’s Spanish assets, say sources-

(Reuters) – E.ON (EONGn.DE) is asking bidders to submit binding offers for its Spanish business by Nov. 3, in a sale likely to fetch as much as 2.2 billion euros ($2.8 billion) to help Germany’s top utility cut debt, three people familiar with the matter said.

Potential bidders include Australia’s Macquarie (MQG.AX), private equity firm CVC Capital Partners [CVC.UL] and Spain’s largest utility Endesa (ELE.MC), which is controlled by Italy’s Enel (ENEI.MI:), the sources told Reuters.

In addition, two consortia are expected to hand in bids.

Spain’s Grupo Villar Mir has teamed up with First State Investments, the asset management arm of Commonwealth Bank of Australia (CBA) (CBA.AX: Quote, Profile, Research, Stock Buzz), two of the people said.

The second consortium comprises Spanish gas and electricity firm Gas Natural (GAS.MC) and Madrilena Red de Gas, a Spanish gas distributor owned by Morgan Stanley Infrastructure (MS.N), the people said, adding the unit could fetch a price of 2.0-2.2 billion euros.

E.ON is currently looking to sell its activities in Italy and Spain, hoping to recoup at least some of its investment after having spent 11.5 billion euros on assets in southern Europe in 2007 in a bet on rising energy appetite.

Since then, energy demand in Europe has stalled, and E.ON was forced to write down about half of the assets’ value.

Sources familiar with the matter told Reuters on Tuesday that E.ON had pushed back the deadline for binding offers for its Italian business until Nov. 24, and that no offers for the entire business had been received so far.

E.ON is looking to raise funds to cut its 29.7 billion euro debt pile and respond to an industry crisis caused by weak energy demand and the expansion of renewable capacity across Europe.

E.ON employs roughly 1,200 staff in Spain, and owns 3.2 gigawatt (GW) worth of thermal plants as well as 1.1 GW of renewable capacity in the country.

It sells power to about 688,000 customers and operates a 32,000 km power distribution network with a so-called regulated asset base (RAB) of about 0.8 billion euros.

“The assets are really good … Competition will be tough (in the bidding), but we are determined to succeed if possible,” Josep Pique Camps, member of the board of directors at Grupo Villar Mir, told Spanish newspaper Expansion on Wednesday.

Endesa’s CEO earlier this month said the company was interested in E.ON’s Spanish distribution and market client portfolio assets.
One of the sources said that Gas Natural’s interest might have cooled after a recent $3.3 billion takeover offer for Chile’s biggest electricity distributor Compania General CGE.SN.

A consortium consisting of Portugal’s EDP (EDP.LS: Quote, Profile, Research, Stock Buzz) and Borealis, the infrastructure investment arm of the Ontario Municipal Employees Retirement System, has dropped out of the bidding process, two of the people said.

E.ON, Macquarie, CVC, Gas Natural and Madrilena Red de Gas all declined to comment. First State, EDP and Borealis were not immediately available for comment.