LONDON (Reuters) - Scottish & Southern Energy Plc (SSE.L) said on Friday it agreed to buy Dublin-based windfarm firm Airtricity Holdings Ltd, the latest expansion of a European electricity company into renewable power.
The British utility said the deal gave Airtricity an implied equity value of 1.08 billion euros ($1.6 billion) and the buyout should be completed in the first quarter of 2008 subject to regulatory clearance.
"This agreement reinforces SSE's position as Britain's leading generator of electricity from renewable sources," Scottish & Southern's Chief Executive Ian Marchant said in a statement.
Airtricity is 51 percent owned by NTR, an Irish energy and waste management company. It is an established renewable energy firm developing and operating wind farms in Britain, Ireland, continental Europe and China and supplying electricity to mainly commercial customers in Ireland.
European electricity companies, while still relying on fossil fuels to produce most of their power, are repositioning to take advantage of new environmental goals limiting carbon emissions and are investing in renewable technologies such as wind, water and solar power.
Germany's E.ON EONG.DE, the world's largest utility, said on August 7 it had agreed to buy windfarms in Spain and Portugal from Danish utility DONG Energy in a 722 million euro deal. Those windfarm assets had a capacity of 260 megawatts (MW).
Scottish & Southern Energy said Airtricity would increase its total operating portfolio of renewable energy, including hydro, pumped storage and biomass, to just over 1,900 MW.
Thanks to the deal, it also expects to have more than 3,500 MW of operating renewable energy capacity by 2013.
Scottish and Southern shares closed down 1.3 percent ahead of the announcement, underperforming a 0.5 percent fall in the DJ Stoxx index of European utilities.
The Irish Times reported on Friday that E.ON, RWE (RWEG.DE), Electricite de France (EDF.PA) and Eni (ENI.MI) were also interested in Airtricity.
Scottish & Southern Energy besides Airtricity's equity value of 1.08 billion euros, it would also assume liability for 375 million euros of net debt, giving Airtricity an enterprise value of 1.455 billion euros.
In addition, 746.5 million euros would be paid for the net proceeds received by Airtricity for the disposal of its North American business in October 2007, making the total cash consideration 1.827 million euros, it said.
That consideration would be funded from facilities provided by Barclays Bank Plc and Royal Bank of Scotland.
Credit Suisse and NCB were the advisers to Airtricity side, while boutique investment bank Lexicon Partners advised Scottish & Southern Energy.
(Additional reporting by Rachel Sanderson, editing by Sue Thomas and Gerald E. McCormick)