CVC re-shapes Iberdrola deal

CVC has teamed up with part government-controlled REE to allay Spanish fears about the acquisition of Iberdrola’s Spanish power network.

Europe buyout firm CVC Capital Partners has sought to quell fears over its acquisition of Iberdrola, the Spanish high-voltage cable network, by allying itself with local carrier Red Eléctrica de España (REE).


REE, 30 per cent controlled by the Spanish government, will acquire a 25 per cent stake in Infraestructuras de Alta Tensión (Inalta), the company created by CVC to complete the acquisition of Iberdrola, for E10m. REE will also assume E140m of the debt component of the acquisition.


The announcement coincides with Iberdrola confirming completion of the initial deal, first announced in July, regarding the sale of Iberdrola’s high voltage network to CVC. CVC had originally agreed to pay E577m for the 4,700km of high voltage power lines, which Iberdrola will continue to operate until 2037, although the price has since increased to E617m to incorporate the company’s fibre-optic network, which was excluded from the original deal.


The deal between REE and CVC will increase the likelihood of CVC’s original deal being approved by the Spanish authorities. Spanish Energy Minister Jose Folgado had originally intimated that the deal may be rejected because of fears that a fragmented network would create safety issues and reduce investment in the network’s redevelopment.


Last week, REE announced the acquisition of two of Iberdrola’s main network rivals, Union Fenosa and Endesa for a total of E1.3bn. The total price comprises E950m for the high voltage assets of Endesa and E395m for the high voltage assets of Union Fenosa. REE will also pay E102m to Endesa for operation and maintenance services over four years and an amount of E36m to Union Fenosa for similar services.


REE’s investment in Inalta makes provisions for the eventual takeover of the company by REE, providing CVC with a future exit opportunity.