Electric Attraction: For Europe's Utilities, A Frenzied Power Grab; As Deregulation Nears, Bids Top $100 Billion; Will Consumers Benefit?
MADRID -- With more than $100 billion of deals proposed in the past two years, Europe's giant utilities have one of the world's biggest cases of merger mania. Just yesterday two European companies culminated a messy battle and agreed to a $58.27 billion bid for Spain's Endesa SA.</br></br>Behind all the deals is a big collision between Europe's new push for a unified marketplace and the national pride of Europe's politicians. Starting July 1, the European Union's power sector will be officially flung open to competition, allowing utility companies from any of the bloc's 27 member nations to sell electricity in any other.</br></br>By unshackling the energy sector, European regulators hoped to boost competition and lay the foundation for stronger growth on the continent. They wanted to inject the continent's electricity marketplace with new players that would spur cheaper energy prices.</br></br>But that vision has bumped up against a messy reality: Politicians in European capitals are reluctant to loosen their grip on the state- run national champions that dominate strategic sectors. Rather than invest in new capacity, transmission lines and other upgrades, the dominant players have instead been bulking up for a wave of mergers.</br></br>Big utilities are scrambling to buy up assets from Bulgaria to Scotland in a mad dash to get bigger when the deregulatory rules come into full effect. Last year, Paris rushed a merger between French utility Suez SA and Gaz de France SA, though the pact has hit legal and political hurdles and the outcome is unclear. Earlier this year, two midsize power companies in the Netherlands, Essent NV and Nuon NV, said they would tie the knot. Spain's Iberdrola SA will complete its $24 billion friendly takeover of Scottish Power PLC in the United Kingdom this month, making it the world's biggest marketer of renewable energy sources such as wind power.