EPH Vies for E.ON's Italian Assets

Privately-held Czech energy group EPH is interested in buying some Italian assets put on the block by German utility E.ON, potentially pitting it against France's EDF in a 2 billion euro ($2.5 billion) battle, two sources close to the matter said on Thursday.

"It has been confirmed internally at the company (EPH)," one of the sources said, adding that EPH sees itself as being in a good position to win the auction.

Edison, an Italy-based utility owned by French power giant EDF, remains interested in E.ON's Italian operations, a source familiar with the situation said.

Another source said EPH may end up buying just gas turbine assets. He added if no single buyer for all of the assets emerged, E.ON would sell the business in pieces.

E.ON, whose market value has plunged by nearly three quarters since 2008 on the back of a sluggish European economy and weak power prices, is in the middle of a restructuring that will see it split its business in two to focus on renewable energy and distribution grids.

As part of the overhaul, the company is selling non-core assets such as its operations in Italy, which sources said could fetch almost 2 billion euros ($2.5 billion). Earlier this month, E.ON announced the sale of its Spanish assets to Macquarie for 2.5 billion euros.

Spokespeople for E.ON and EPH declined to comment.

Separately, a handful of energy companies and investment funds had handed in binding bids for individual assets, sources familiar with the matter said in late November.

Italian groups like Hera and Gala have bid for E.ON's client portfolio, they said. Italy's biggest utility Enel had shown initial interest in the client base but then pulled out.

Energy group Erg and infrastructure fund F2i have made offers for the renewable assets as have some investment funds, the sources had said.

China's Shanghai Electric Power earlier this month said it was in preliminary contact with E.ON over the possible purchase of the German utility's Italian coal assets, which the Chinese firm said were worth 150 million euros.

E.ON's prized hydroelectric plant was seen attracting a value of around 1 billion euros, while the wind and solar operations were valued at around 300 million euros, and the client base 100-200 million euros.

EPH, which operates electricity, gas and mining companies mainly in the Czech Republic, Slovakia and Germany, has also shown interest in Vattenfall's German assets and Enel's Slovak utility.

In November, EPH agreed to buy the 2,000 MW Eggborough coal-fired power plant from Eggborough Power Limited, making its first acquisition in Britain.

By Michael Kahn Additional, reporting by Jason Hovet, Stephen Jewkes, Arno Schuetze and Christoph Steitz