Liberalisation of the electricity markets in the UK and Scandinavia has driven merger activity in these territories. This was evident in 1996 with U.S. companies taking over MEB, East Midlands Electricity and Northern Electric, with London Electricity likely to follow in early 1997. There could have been more, but intervention from the regulatory authorities prevented National Power from being acquired by Southern Company.
In Scandinavia, the combined electricity market of Sweden and Norway may be suffering from several problems, but that has not prevented the major players from increasing their market share through acquisition. Finland's IVO now controls Gullspang Kraft, Sweden's fourth-largest generator, and the number of distributors in Sweden continues to decline, with deals such as Sydkraft's acquisition of Orebro Energi.
Elsewhere in Europe, the passing of the EU Directive on the liberalisation of electricity markets is affecting industry consolidation. In Spain, the Spanish Government has approved Endesa's acquisition of controlling stakes in Sevilliana de Electricidad and Fecsa. In the Netherlands, the four largest generators (EPON, EPZ, EZH and UNA) are holding merger talks. In Germany, EVS and Badenwerk are pursuing a merger, and Bayernwerk is seeking to acquire the majority of Isar-Amperewerke. In Denmark, Vattenfall's acquisition of a 10-percent stake in NESA sparked concerns among the Danish Government when it was reported that Vattenfall was also interested in acquiring the 80-percent stake in the company held by the Gentofte, the local municipality.
Switzerland and some other countries on the fringe of the EU also saw merger activity in 1996. Electricite de France and RWE jointly acquired a 40-percent stake in Motor Colombus, which controls Aare-Tessin, the country's largest electricity company. Although privatisation of the Hungarian electricity industry slowed, due principally to governmental delays in approving prices increases, both AES and IVO acquired state-owned power plants. In the Czech Republic, the sale of strategic stakes in the eight regional distribution companies has been deferred again. However, Eastern Group acquired a small stake in one of the distributors and took a controlling interest in a cogeneration company. In Croatia, HEP signed an agreement with RWE to complete a power plant and agreed Memoranda of Understanding with Enron and Enserch covering two greenfield power stations.
Outside Europe, cross-border activity continued in Australia and South America. Following the sale of five distributors in 1995 to U.S. utilities, the State of Victoria sold two of its generators to the U.K.'s National Power and PowerGen. Sell-offs in Brazil commenced with the sale of Light to a consortia of Electricite de France, AES and Houston Industries and was followed by the sale of Cerj to a consortia of Chilectra of Chile, Endesa and Electricadade de Portugal.
One feature of the aquisition activity in 1996 has been the number of potential buyers. The sale of Cerj attracted some 29 bids and a similar number are reported to be interested in acquiring a stake in Bewag, the Berlin-based utility, and in HEW, the Hamburg-based utility. In Turkey, more than 50 bids for some 19,000 MW of greenfield and existing plant have been made, with particular interest in the gas-fired