Acciona may get high profits through Endesa

While the battle for control of Endesa has not yet been resolved, Acciona's investments in Spain's biggest electric company are providing large revenues to the Spanish builder. The construction company has invested some EUR 7.55 bn to build up a total 21.03% stake in Endesa. This interest is currently valued at EUR 8.18 bn in the market, some EUR 632 mln more than the price it was purchased. This amount almost doubles Acciona's net worth in 2005.

A key-meeting of Endesa's shareholders will be held in the end of February. German E.ON will try to get rid of the existing rule limiting voting rights of any shareholder to 10%, before formally launching its bid, whilst Acciona will try to get the support of the remaining shareholders. If Acciona's move doesn't go through, the company can sell its stake in Endesa with high returns.

Madrid-based Acciona is one of the biggest building contractors in the world. Like many of its Spanish peers, it is following a strategy of diversification to utilise its massive cash reserves and to ease the shock of an expected slowing of prices in the Spanish construction market. This has resulted in increased overseas expansion as well as foreign and domestic utility and other companies outside the property sector.

Meanwhile, Iberdrola, Spain's second largest electricity producer, is pushing ahead with its EUR 17.1 bn bid to takeover Scottish Power to create the third largest utility in Europe. Iberdrola, which also has a significant property arm, confirmed on Tuesday that it had contacted the European Commission's with information on the merger. The Commission is expected to give its ruling on the validity of the merger by mid February.