Enel Buys Stake in Russia Power Company

Wednesday, 6 Jun 2007 | 8:29 AM ET

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.

  Price   Change %Change


Contact U.S. News


    Get the best of CNBC in your inbox

    › Learn More

Don't Miss

U.S. Video

  • CNBC's Jim Cramer explains why he is watching the oils, including Baker Hughes, Pioneer Natural Resources and EOG Resources.

  • In this clip from the March 10, 2009 edition of CNBC's Squawk on the Street, the late Mark Haines tells Erin Burnett, "I think we're at a bottom. I really do." As the credit crisis continued to swirl, the Dow had closed the day before at 6,547.05, a staggering 54 percent plunge from its all-time closing high above 14,000 in October of 2007. It was "going out on a limb" at the time, but has proved to be one of the best market calls ever heard on CNBC. March 9 turned out to be the bear market closing low. In the three years since Mark's call, the Dow has almost doubled.

  • CNBC's Rick Santelli and the traders on the floor of the CME Group express outrage over the notion they may have to pay their neighbor's mortgage, particularly if they bought far more house than they could actually afford, with Jason Roney, Sharmac Capita