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UBS sell-off set to create new energy giant

The new energy provider is set to be the largest in western Switzerland (Imagepoint)

UBS has agreed the sale of its 55.6 per cent stake in Swiss electricity holding Motor-Columbus, which controls utility Atel, for SFr1.3 billion ($1 billion).

The buyers are a Swiss-led power consortium of French electricity group EDF, the Lausanne-based group EOS and Atel's Swiss minority shareholders.

UBS, Switzerland's largest bank, is selling 281,535 bearer shares in Motor-Columbus at SFr4,600 a share. The sale price means a pre-tax gain for UBS of around SFr350 million.

A consortium of Atel's Swiss minority shareholders will acquire 14.7 per cent, EOS Holding (Energie Ouest Suisse) 16.4 per cent and EDF 17.3 per cent of Motor-Columbus's equity capital. The remaining 7.2 per cent will be purchased by Atel.

After the merger of Motor-Columbus and Atel, EDF will have a 25 per cent stake in the new company, EOS 15 per cent and Swiss minority shareholders 40 per cent.

BKW stake?

The transaction does not include participation by the Bernese BKW power company, which had also been in the bidding.

But Motor-Columbus chairman Heinrich Steinmann told a news conference he did not rule out a BKW stake in the future new holding.

The deal, which has still to be approved by various national and international authorities and will not be completed before the beginning of next year, will solidify EDF's leading position on the European market while keeping Atel in mainly Swiss hands.

It creates the possibility of building a considerable Swiss-EU energy company with Swiss majority ownership.

The Swiss Federal Energy Office said on Friday it was satisfied with the outcome.

"We wanted an industrial solution with a Swiss majority and that is what UBS has provided," a spokeswoman for the Federal Energy Office said.

Heated competition

It also highlights the heated competition surrounding the planned opening of Switzerland's energy market in 2007, as Swiss and foreign power players try to boost their market clout.

On September 21 the House of Representatives voted in favour of a two-stage approach to liberalisation of Switzerland's electricity market.

Under the draft law, all end-users would be able to choose their supplier freely by 2007. Such a change would bring Swiss legislation closer into line with that of the EU, which also wants to introduce consumer choice.

The relationship between Swiss banks and the Swiss electricity industry goes back more than a century, when banks provided the bulk of the funds to build huge projects such as dams and bought considerable stakes in the power companies.

swissinfo with agencies

Key facts

UBS is selling 281,535 bearer shares in Motor-Columbus at SFr4,600 a share.

This corresponds to a 55.6 per cent stake in Motor-Columbus.

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In brief

Following a series of asset sales, Motor-Columbus in 1993 focused on the core electricity activities that were integrated into Atel, originally a local electricity provider for the Swiss Aare and Ticino regions.

Atel, based in canton Solothurn, is one of Switzerland's largest power generators, employing around 8,000 workers and with a turnover of SFr7 billion in 2004.

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