Takeover of RG&E's parent may be in doubt

(February 11, 2008) — The $4.5 billion purchase of Energy East Corp., parent of Rochester Gas and Electric, by a Spanish utility may be delayed or even scuttled because the overseas utility itself is an apparent takeover target.

The state Public Service Commission staff has asked for a postponement of hearings on Iberdrola SA's proposed purchase of Energy East because of reports linking European utilities with a potential hostile bid for Iberdrola.

Iberdrola responded to the PSC staff by saying that delaying the proceedings is “unnecessary and should be rejected because there has been no offer or bid made, or agreement reached, to acquire the stock of, or obtain a controlling interest in Iberdrola.”

Approval by New York state is the last regulatory hurdle for Iberdrola’s planned purchase of Energy East, which is the parent of New York State Electric and Gas as well as RG&E.

Hearings on the deal are to begin this month unless the PSC goes along with the staff request for a delay.

Electricite de France SA last week said it held talks with Iberdrola’s largest shareholder about investing in the Spanish utility. E.ON AG of Germany is also considering a takeover bid, according to newspaper reports in Europe.