Vattenfall Could Make $16 Billion Bid for Takeover of Scottish and Southern Energy

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Researched by Industrial Info Resources (Sugar Land, Texas)--Vattenfall AB (Stockholm, Sweden) is believed to have made a $16 billion takeover bid for rival Scottish and Southern Energy plc (LON:SSE) (SSE) (Perth, Scotland), the second largest power company in Britain. SSE has not commented on the possible takeover bid. Rumors are circulating that the two companies are discussing the possibility of setting up a new energy company in Europe. The possibility of Vattenfall making a bid for SSE has been in discussion for several years and even more so since June 2008, when Vattenfall said that it was eager to foray into the power market of Britain through acquisitions and the construction of new plants.

While SSE has a customer base of nine million, Vattenfall is a leading producer of energy in northern Europe and has the necessary cash reserves to fund an acquisition. SSE is Scotland's largest company by market capitalization, and its revenues in 2008 totaled $15.3 billion, an increase of 28.6% from the revenues of 2007.

Vattenfall is also a bidder in the auction for Dutch government-owned energy company NV Nuon (Amsterdam, Netherlands). Nuon is a multi-utility company involved in the selling, distribution and marketing of energy and energy related products and services. The company's revenues in 2007 totaled around $7.7 billion, an increase of only 0.9% from the revenues of 2006. Vattenfall's talks with SSE are largely seen as a backup plan in the event of losing the bid for Nuon. SSE has not made any comment on this observation either. However, analysts are of the opinion that the deal with SSE is sure to be successful even if Vattenfall were to lose the bid for Nuon.

Meanwhile, Vattenfall's German power grid sale is progressing as planned and is expected to be completed within the next few months. The sale was announced in July 2008 after the European Union began to urge utilities to sell their energy transmission networks in a bid to increase competition. According to sources, the sale has already attracted offers of more than $1.33 billion. Tuomo Hattaka, Chief Executive of Vattenfall Europe, expects a final decision to be made in the second quarter of the year.

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