The Spanish utility Unión Fenosa and UK based power company National Power have formed an alliance, Reuters reports. As a result of the deal, the companies will become joint owners of a new generation unit called Unión Fenosa Generation which has activities amounting to $5 billion, the Spanish company claimed.
National power will be investing around $700 million for a 25 per cent stake in the Spanish company. However the company in which it is investing has debts of nearly twice this amount. From the UK company's point of view the deal provides it with a foothold in the Spanish market. It could also help National Power in South America.
Under the terms of the deal, the UK company can raise its stake in Union Fenosa Generation to 30 per cent. A two per cent share swap is also being envisaged.
The company will operate exclusively for its two parents in Spain, Portugal and Morocco. Unión Fenosa and National Power will undertake investment in Latin America, France and Italy on a 50:50 basis.
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