Energy East takeover may be delayed

(February 12, 2008) — MADRID, Spain — Iberdrola SA's proposed purchase of Energy East Corp., the parent of Rochester Gas and Electric, may be stalled because Iberdrola itself could be a takeover target.

Reports saying that European utilities might make a hostile bid to acquire Iberdrola make it difficult to know who will eventually own Energy East, the staff of the New York state Public Service Commission said in a filing that asked for an indefinite delay in the approval process.

Iberdrola responded by saying that delaying the proceedings is "unnecessary and should be rejected because there has been no offer or bid made, or agreement reached, to acquire ... a controlling interest in Iberdrola."

The company, which is based in Bilbao, Spain, said it would notify New York regulators of any such agreement. Approval by New York is the last regulatory hurdle for Iberdrola's planned $4.5 billion purchase of Energy East, which is the parent of New York State Electric and Gas as well as RG&E.

Hearings on the deal are to begin this month unless the PSC goes along with the staff request for a delay.

Iberdrola wants Energy East as a platform to expand in the United States, especially with wind-driven power plants, of which Iberdrola is the world's biggest owner.

Electricite de France SA said last week that it had held talks with Iberdrola's largest shareholder about investing in the Spanish utility. E.ON AG of Germany is also considering a takeover bid.

Iberdrola had planned to complete the purchase of Energy East by the end of June, but that timetable might now be in doubt.

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