ACS seeks key role in creation of big energy firm

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To use Iberdrola holding as lever in consolidation process

26 February 2008

MADRID - Leading Spanish builder ACS, said Monday it wants to play a key role in the consolidation of the Spanish energy sector through its stakes in Iberdrola and Unión Fenosa.

"We are in favour of the consolidation of a Spanish [energy] group in which ACS can play a leading role," ACS Chairman Florentino Pérez said at a presentation of the construction group's earnings for last year. "There is an opportunity for this in Spain, and if we can we are going to play that card."

ACS controls directly and indirectly 12.4 percent of the share capital of Iberdrola, Spain's second-biggest electricity company, and 45.3 percent of Unión Fenoa, the third-biggest power group.

ACS has held talks with French state-controlled power company Électricité de France (EDF), which has expressed interest in acquiring Iberdrola. This has sparked speculation that both companies plan to acquire Iberdrola and carve it up between themselves.

Iberdrola Chairman Ignacio Sánchez Galán said last week his company would move to repulse any hostile move by EDF and described ACS as more of a rival than a shareholder.

Pérez said Iberdrola would serve as a "strategic lever to create value through a process of consolidation," which would be headed by Unión Fenosa.

The former chairman of Real Madrid soccer club said ACS would not make any move with respect to Iberdrola until after the 9 March general elections.

"The new government will obviously have to decide on the country's energy policy, and we will follow that," Pérez said.

ACS has branched out into the energy sector ahead of an expected slowdown in the domestic construction sector and diversified geographically.

 It acquired 25.1 percent of leading German builder Hochtief last year and now holds a 30-percent interest in that company.

As a result of that diversification, two thirds of ACS' 2007 turnover, which was up 53.7 percent to EUR 21.312 billion was generated by non-construction activities, while 24 percent of that total came from its overseas businesses.

ACS' net profit climbed 24.1 percent to EUR 1.551 billion, which includes an extraordinary gain of EUR 541 million from the sale of its interest in transport company Continental Auto.

Excluding that figure, net earnings were up 23.9 percent to EUR 1.010 billion.

[Copyright El Pais / Adrian Soto 2008]

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