Enel Buys Stake in Russia Power Company
Italy's Enel, which is poised to take over Spain's biggest utility, will expand its presence in Russia after it beat rivals to buy a one-quarter stake in the Russian wholesale generation company OAO OGK-5 for about $1.52 billion (1.124 billion euros).
Enel bid against Germany's E.On, UC Rusal, the world's largest producer of primary aluminum, and OAO Novatek, Russia's second-largest natural gas producer, driving the price up nearly 60% from the starting price.
The final bid represents a premium of around 15% over OGK-5's share price at Tuesday's close.
Enel's acquisition of a stake in OGK-5 will give it a power-generation destination for the former OAO Yukos gas assets it purchased in April in an auction it won with Italian oil giant Eni .
Enel has been pursuing a strategy of expansion into Russia -- which in turn is trying to open the sector to competition and modernize its aging power infrastructure.
The Rome-based company already has a foothold in Russia. In 2004, Enel and its local partner ESN won a tender to manage the North West Thermal Power Plant supplying the city of St. Petersburg and the surrounding area. Enel also has 49.5% stake in Russian power supplier RusEnergoSbyt.
Enel, together with its Spanish partner Acciona, is poised to take over Endesa after E.On pulled out of the race. Enel announced a share swap last Friday to increase its Endesa stake to 24.97%.
Enel, Italy's former power monopoly, is expanding abroad due to competition limits at home.