AES Corp. of Arlington, the world's largest independent producer of electric power, has agreed to buy the largest coal-fired plant in Western Europe for $3 billion, the company announced yesterday.
AES will buy the Drax plant, based in northern England, from its owner, National Power PLC of Britain. AES's president and chief executive, Dennis W. Bakke, said the sale was required under British antitrust laws because National Power controlled too much of the United Kingdom's power market.
AES, which owns power plants or sells electricity in 23 countries, has been operating in Britain for 10 years, so the Drax plant fits in nicely, Bakke said. AES sells the power it generates to utilities or governments.
"It was an opportunity for us," he said. "We have a lot of coal facilities, and we know how to run them. It's the cleanest, newest most efficient power plant in the UK. And it has great size."
The acquisition, which AES expects to be completed by the end of the year, requires approval from British regulators and from National Power shareholders. It would increase AES's revenue by $700 million a year, or about 20 percent, Bakke said. The Drax plant generates about 8 percent of the electricity in Britain.
Bakke said about $2 billion of the purchase price will come from money borrowed using the Drax plant's future earnings as collateral. The remaining $1 billion is to come from issuance of AES bonds or stock.
In a telephone call with energy industry analysts, AES officials said they expect to make few major changes at Drax. They said the acquisition could add up to several cents a share to earnings.
AES stock closed yesterday at $57.31 1/4, up $2.31 1/4 a share on the New York Stock Exchange.