From Friday:

International Power downgraded

Shares in International Power fell in early deals as DKW downgraded the UK utility to sell from hold.

In a note to clients, Dresdner Kleinwort Wasserstein said International Power's share price is up 10% in the last week, driven by earnings upgrades and bid hopes.

Dresdner played down hopes of a bid and cautioned that the high gas prices in the wake of hurricane Wilma in the US may be temporary.

Turning to M&A talk, it believes an RWE bid is highly unlikely; the German group is selling its US water operations and seems unlikely to want to make a new investment in the region in the near term.

Nor, in its view would, RWE be interested in generation capacity in Australia, Pakistan, Malaysia, Indonesia or the Middle East, which makes up 40% of the portfolio.


And today:

Japan's Sumitomo, 2 Europe firms to start 1.3 bln usd Bahrain power project
AFX


TOKYO (AFX) -- Sumitomo Corp and two European firms will begin a 1.3 bln usd power generation and water desalinization project in Bahrain by purchasing a state-owned plant, the Nihon Keizai Shimbun reported.

In its online edition the newspaper said the completed project is expected to meet 20 pct of Bahrain's total power needs and 65 pct of its urban water demand.

The partners plan to sell electricity and water to the government for 20 years.

Sumitomo's partners are leading UK power supplier International Power and Belgian electricity company Suez Tractebel.

The three firms will set up a joint venture to manage the project, the newspaper said.

It said they will buy a power generation-water purification plant in northeastern Bahrain that can generate one mln kilowatt-hours of electricity and desalinate 135,000 tons of sea water a day.

The firms will also build a new desalination plant with a daily capacity of 270,000 tons, scheduled for completion by November 2007.

The venture will be capitalized at 260 mln usd, with Sumitomo and Tractebel each contributing 30 pct and International Power 40 pct. Any remaining costs will be covered with bank loans.

Am having a look at this one at the moment with a view to buying for the med term. Now FTSE 100 stock & divi looks assured, with brokers currently tipping as a strong buy.
Any of you guys who held a while ago still holding or considering getting back in?
Forecast for '09:
EPS 33.56p
EPS growth +16%
Div yield 5.5%
P/E 7.4

Yes, I continue to hold HARRYCAT. I think the market worried about its debt levels but, cash flow is good and sp has begun to recover as institutions look for income.

From 10th Dec:
"Electricity generator International Power has an excellent free cash flow position. It has been growing it significantly over the past few years. The group also operates in a relatively recession-resilient market and, with a prospective yield of 4.7%, it is attractive on this front too. Group assets in the Middle East continue to perform well and the company has recently increased capacity in the region. All in all, International Power looks in a good position to weather the downturn and is well placed to grow earnings longer term. Its shares are a buy says the Telegraph."

Moved up nicely today probably in recognition of its non stg earnings, defensive qualities and the falling cost of commodity inputs.

Excellent. Slow & steady progress.

Moving up nicely, good yield 3 short term target.

Quite tricky to pick a target sell price as 280 seems to be current resistance. Above that maybe 300 or 320p, but this company is not immune to any sudden economic downturn/bad news, so tempted to stick to a target & lock in profit.

We are holding for the longer term.

Citigroup downgraded IPR to hold from buy today.
I don't currently have much faith in brokers, but they have the nasty habit of affecting individual share prices.
Long term I think this will be a winner. Possibly some sideways trading in the meantime.

advice from citigroup probably worth as much as their shares!

MoneyAM
"International Power profits rose 16% last year but it warns profitability in 2009 will be lower.

The firm's full year results for the yhear to the end of December show profits of 1,050m and earnings per share of 32.4p - up 20%.

Its full-year dividend of 12.15p per share is up 20%.

Chairman Sir Neville Simms said the results were driven by higher profits from operations in Australia and North America, a record year at First Hydro in the UK, and good performance from its long-term contracted asset base.

But he added: "In the absence of a significant improvement in pricing in the US and the UK, it is likely that group profitability in 2009 will be lower than in 2008.

"However, the long-term fundamentals of our markets remain attractive and this together with our strong financial position means International Power is well placed for the future"."

MoneyAM
International Power says that, together with its partner, it has signed an agreement for the sale of the Hartwell plant, a 318MW gas and oil-fired peaking facility in the USA to Southern Power. International Power owns 50% of the Hartwell plant.

The plant will be sold for a purchase price of $148.5m less approximately $54.0m of existing project level debt, plus a working capital and fuel oil adjustment to be determined.

In addition to regulatory and lender consents, the transaction is subject to a right of first refusal held by Oglethorpe Power Corporation with respect to the facility.
Completion of the sale is expected in Q3 2009. "

A good rise today with volume on takeover rumours.

GDF Suez sniffing around. 385p being a suggested price.

"The UK press is mentioning the possibility for GDF to bid on IPR. According to
the articles, GDF is talking to the French government about the option to launch
an offer prior to year end (Daily Mail and The Times).
We (Merrill Lynch) have always argued that the fit between GDF (Ex Tractebel) and IPR portfolio was excellent. In the US, both groups are exposed to the same states, in the Middle East both have a strong exposure to IPP projects and in the UK IPR's generation assets would fit GDF new ambitions to enter the UK power market. Only the Australian and Pakistani assets would not fit with the GDF portfolio in our view."

From The Times today:
"Shares in International Power gained 3p to 284p amid further talk that GDF Suez was considering making an offer for the electricity generator. The latest twist in the tale is that Suez has appointed two unnamed French banks to look at such a deal in more detail. Recent speculation has suggested an offer at more than 400p per share."

I'm happy with IPR even without a bid..........ecstatic with :-)))
Chocolat, your thread I see, are you involved in the stock now?

From FT & Deal reporter 10.12.09:
"The French State, which is GDFs main shareholder with a 35.6% stake, is believed to have put the shackles on the deal, the two bankers claimed. The government is thought to be cautious after it was accused of overpaying for British Energy - France paid GBP 12.47bn for the deal in 2008. IPR is currently trading below 300p and a 400p a share deal is seen as too expensive, the banker said. President Sarkozy is also sensible to keep the unions happy in current economic context, and financing a GBP 6bn deal with public money could trigger social backlash, the two bankers said.

The case is rumoured to be under review by the French Government Shareholding Agency (APE), said the bankers. A firm offer from GDF is unlikely to arise before Christmas but things could move forward in January, one of the bankers claimed. He could not see another bidder getting involved at this stage, noting Centrica would not have the financial strength. Centrica was previously reported alongside GDF as a possible buyer for IPR, although the UK utility is understood to be looking for bolt on deals in the US.

GDF has previously been reported to be in advanced informal talks with IPR although these talks were today strongly downplayed from the UK side.

The two groups have been holding informal chats for a while and have reached an agreement over a 400p a share price, said a Paris-based banker. This banker added that Lazard and BNP Paribas are acting for GDF. This was seconded by another French banker not directly involved in the matter."

French in takeover talks with International Power

I wonder if first offer will be at 400p (though initially doesn't look to be a cash offer)? Presumably then followed by a rejection & a bit of interference by HMG.

(London - 18 January 2010: 15.08 hrs) "International Power plc ("International Power" or the "Company") notes the recent market speculation and movement in the Company's share price. The Company confirms that it has held preliminary discussions regarding a potential combination of International Power and certain power assets of GDF Suez S.A ("GDF Suez").

No agreement was reached between International Power and GDF Suez and discussions are no longer ongoing"

Ouch! 345p down to 313p in the blink of an eye!