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The merger of Enìa and Iride was signed on 30 October. Disagreements over the balance of power may have precipitated Hera’s exit from the merger.

Enìa and Iride signed a merger agreement on 30 October which will lead to the creation in spring 2009 of a single super-utility with ambitions to extend its activities across the north of Italy and beyond.

The new company’s estimated market capitalisation will be in the region of €1.5 billion, with combined revenues of almost €3.5 billion in 2007. Water services, which last year represented 11.8% and 4% of revenues for Enìa and Iride, respectively, accounted for 19% of the combined 2007 EBITDA of €469 million. Going forward, the new group’s water business is due to be boosted by extending services beyond the geographical areas currently covered. Initially, the combined entity will serve 2.4 million people on the water side.

At a press conference on 3 November, Iride’s chairman, Roberto Bazzano, said the new entity would be open to striking deals with foreign operators on specific projects, though he ruled out any strategic alliances for the time being.

Iride and Enìa’s boards will be asked to approve the deal by early January, while the merger should be completed in March.

Under the original plans, confirmed by a letter of intent signed last May, Bologna-based Hera – the largest of the three utilities – should have also been part of the merger deal. Although Hera’s official line was that the timescale had not allowed material differences to be resolved, a source close to the process claimed that disagreements over the balance of power in the new entity ultimately led to Hera being left out of the final picture.

Nevertheless, Iride’s chairman, Roberto Bazzano, told the Italian press in early November that Hera’s future involvement in the new company was still a possibility. His words were echoed by those of Hera’s chairman, Tomaso Tommasi di Vignano, who said “never say never”. He added that Hera’s strategy for growth is based on various elements, including mergers.