Utility group NTR has executed the first major business deal of the year with the €1.08 billion sale of Airtricity's European unit to Scottish and Southern Energy, Britain's second-largest electricity generator.

The transaction puts an enterprise value of €1.46 billion on the European business when its net debt of €375 million is included. Scottish and Southern, which will assume that debt, is paying a net consideration of €1.83 billion for the assets.

This sum includes €746 million in net proceeds received by Airtricity from the €1 billion sale of its North American wind farms to German utility Eon last October.

The biggest beneficiary of the deal is NTR, which took a 51 per cent stake in Airtricity for £3.3 million (€4.19 million) in 1999. Other shareholders include alternative energy fund Ecofin, which owns 16 per cent of the business.

Company founder Dr Eddie O'Connor owns 4 per cent and stands to receive more than €50 million from the European sale when his share options are included. Other Airtricity executives own 12 per cent. The balance is held by private investors.

Spanish group Iberdrola and Eircom owner Babcock & Brown were in contention in a restricted auction process that attracted about 10 bids.

A bid from Dr O'Connor and some of his colleagues, backed by finance organised by JP Morgan, was unsuccessful. They are said to have offered 11 per cent more for the assets than Scottish and Southern but their bid was subject to due diligence. NTR declined to comment on that.

Company chief Jim Barry said "Scottish and Southern had the winning bid" when asked whether there had been higher bids with conditions attached.

The Scottish and Southern bid was unconditional, it is believed. "Our price is our price. We were prepared to move very,,, very quickly. We offered a package of speed certainty and price, which they found very attractive," said its chief, Ian Marchant.

NTR's share of the proceeds from the two sales will be diluted to some 47 per cent due to the vesting of share options held by Airtricity executives, Mr Barry said.

"We're going to clear the best part of €850 million cash into the business," he said in reference to the group's net return from both deals.

NTR invested a total of €273 million in Airtricity in the four years after 2002, the most recent outlay being a €150 million investment in 2006, he added.

The group is known to be mulling a distribution of up to €400 million in cash to shareholders as a result of the deals, but Mr Barry declined to comment to on its specific intentions. "Reports of our demise are premature," he said when asked whether NTR should unwind its operations after the exit from wind energy by demerging its waste and bioenergy units.

"We remain firmly committed to exploiting infrastructure opportunities in the international environmental energy space."