Spanish utility Gas Natural has reached an agreement to buy a 45 percent stake in rival UnionFenosa from the building company ACS, sources close to the deal said on Wednesday.
"There is a pre-agreement for the deal based on a price of 18.33 euros per share," a source said.
A separate source also close to the deal said Gas Natural will buy an initial 9.99 percent of ACS's Fenosa stake, and has said it will acquire the remaining shares at the same price.
The Barcelona-based gas company will then make a full cash bid for Fenosa to comply with Spanish regulations. The offer values Fenosa at around 16.75 billion euros ($26.1 billion).
Under Spanish law, energy watchdog CNE must first approve any stake acquisition of over 10 percent in an energy company.
"It's all been agreed and the operation just needs the approval of the companies' boards," the second source said.
On financing, the second source noted that Gas Natural make a capital hike to part fund the deal, but said that no decision had yet been taken.
"There could be a capital hike, but that remains to be seen," the source said.
Gas Natural's core shareholders La Caixa and Repsol YPF could subscribe to a capital hike if required.
The savings bank and the oil and gas company's boards are also meeting today.
Shares in ACS and Gas Natural are also suspended from trading.