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Italgas plans to spend up to $2 bln on M&A, to upgrade grid

MILAN, June 12 (Reuters) - Italy's biggest gas distributor, Italgas, has earmarked almost 2 billion euros ($2.27 billion) for possible merger deals and double that amount for maintenance and further upgrades to its grid in its latest business plan.

In the plan covering 2019-2025 Italgas said it would spend 4.5 billion euros ($5 billion) on maintenance and making grids more digital, 12% more than in a previous plan.

It said it could also spend some 1.9 billion euros to buy networks in Italy in new tender processes.

Europe's third-biggest gas distributor is keen to use M&A to help boost its share of the Italian market to about 45% from 34%.

New rules were introduced in 2011 to streamline the fragmented industry by cutting concession areas to 177 from almost 7,000. But concession awards have been very slow.

Italgas, whose main shareholder is state lender Cassa Depositi e Prestiti, said the planned investments would grow its regulated asset base by 4.7% a year to 8.9 billion euros at the end of the plan.

The group confirmed its current dividend policy and said it expected core earnings this year to come in around 840-860 million euros. ($1 = 0.8826 euros) (Reporting by Stephen Jewkes Editing by Mark Bendeich)