The Board of Directors of IBERDROLA has agreed a proposal to the Board of IBERDROLA RENOVABLES to initiate negotiations for a merger by absorption of the renewables subsidiary by the parent.

IBERDROLA has proposed an operation equivalent to 0.499 of its own shares for each IBERDROLA RENOVABLES share, valuing the subsidiary at €2.978 per share or a 16.7% premium over its average share price for the last six months.

The operation will involve IBERDROLA voting in favour of the distribution of an extraordinary dividend to be proposed by the Board of the subsidiary at a shareholders meeting, provided the amount is equivalent to 40% of the stated share value of €2.978.

In the event of the dividend obtaining approval, the exchange ratio would be modified to 0.299 IBERDROLA shares per subsidiary share. For this purpose, the parent company would raise capital by €246.6 million.

The merger by absorption proposed today by IBERDROLA improves the ratio at the time of the original IBERDROLA RENOVABLES share offer in December 2007, with a premium of 2.7%, and will give existing IBR minority shareholders access to a solid stock with high liquidty and attractive dividend yield.

Through the proposed transaction, IBERDROLA seeks to extract value from IBERDROLA RENOVABLES that has not been reflected in its share price since the flotation, with its continuing development as an independent business unit headquartered in Valencia.

The transaction closing, following approval by the respective Annual Shareholders Meetings, is expected in July.

IBERDROLA has been advised by Citigroup and HSBC, with legal advisers Uría Menendez Abogados S.L.P.

Tags: Iberdrola Renovables