Brazil sets May 30 deadline for improved Enel, Iberdrola bids for Eletropaulo

MILAN, May 30 (Reuters) - Italian utility Enel and its Spanish peer Iberdrola have until the end of Wednesday to present improved bids for Eletropaulo, the Brazilian power grid operator said, citing the country's market regulator.

Eletropaulo Metropolitana Eletricidade de Sao Paulo SA said it had received a letter from Brazilian market watchdog CVM on Tuesday setting the May 30 deadline for best bids and confirming June 4 as auction date.

Brazil's biggest power distributor became one of the world's most prized power assets last month when Enel and Iberdrola locked horns in a country both see as key to expansion.

But a row over the procedural terms of the bid has delayed the process.

Enel offered 32.20 Brazilian reais a share in April, valuing Eletropaulo at 5.39 billion reais ($1.5 billion). The offer was above an Iberdrola bid of 32.10 a share which it made through its Brazilian subsidiary Neoenergia.

A source close to the matter said bids on Wednesday were due in by 7 p.m. (2300 GMT) and would be opened after.

The auction on June 4 was effectively the settlement date after Eletropaulo investors had decided what to do with their shares in the light of the bids, the source said.

The Enel bid is dependent on 50 percent of Eletropaulo shareholders plus one accepting the offer.

On Tuesday the board of Eletropaulo recommended its shareholders accept Enel's bid because it was higher but added it was open to modifying its opinion if bids changed. ($1 = 3.7256 reais) (Reporting by Stephen Jewkes Editing by David Holmes)