“They are looking at it very carefully,” said one source, who added that E.ON board members including chief executive Wulf Bernotat continue to view Spain as a key strategic priority after it was thwarted in an earlier effort to buy Endesa, another Spanish group.
E.ON could consider buying a stake in Iberdrola on its own or might seek the help of a joint bidder, probably a Spanish company such as ACS, to smooth the way for a deal, allowing it to buy certain assets but not others. Such a strategy might also allow the group to avoid political opposition within Spain as well as from competition authorities.
Spain is a rapidly growing energy market, while Iberdrola is one of the world's leading experts in renewable power, especially wind and solar energy, which is considered a huge growth opportunity following the EU's announcement that 20 per cent of Europe's energy must come from renewable sources by 2020.
Power suppliers are seeking to forge pan-European networks as the European Union acts to force member states to deregulate their energy markets more fully.
The companies also believe they have to be large to deal with huge wholesale energy groups such as Russia's Gazprom.
E.ON's attempt to buy Endesa dragged on for two years but the group was finally defeated last year.
A spokesman for E.ON in the UK referred calls to Germany where a spokesman could not be reached for comment.
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