UPDATE 1-Red Electrica to buy 5 pct of Portugal's REN

Tue Mar 6, 2007 5:49pm GMT

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MADRID, March 6 (Reuters) - Spanish electricity grid operator Red Electrica (REE.MC) said on Tuesday it had agreed to buy 5 percent of Portugal's network Redes Energeticas Nacionais (REN), part of a strategic agreement between the two.

Last month Red Electrica said it had been in preliminary contact with Energias de Portugal (EDP) (EDP.LS) about the possibility of buying a minority stake in REN.

They aim to invest together in developing electricity networks in Portugal and Spain, and eventually participate jointly in international projects.

Red Electrica said the price of the stake would be linked to the market value given to REN in an initial public offering which is to be decided later this year.

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