The Qatar investment makes it slightly easier for Iberdrola to finance its two recently announced deals -- the $2.9 billion purchase of Elektro in Brazil and the buyout of minority shareholders in its listed renewable unit, Iberdrola Renovables.

Iberdrola will issue 338 million new shares to Qatar at a 5 percent discount to the market price, bringing in 2 billion euros in cash. It will use most of the proceeds to buy back 247 million of its shares in the market. These will then be used to satisfy the share component of Iberdrola's offer to minority shareholders in its renewable unit.

Issuing shares at a discount and then buying them back at the market price seems a sure fire way to lose money. And the net effect of the Qatar investment is slightly more dilutive to existing shareholders -- ACS included -- than the company's original financing plan. However, the deal strengthens Iberdrola's balance sheet a bit, while the 1.5 billion euro buyback should support its share price for a few months. This helps explain why the utility's share price rose on news of the deal -- giving Qatar Holdings an instant 8 percent paper profit.

There's little industrial logic to bringing in Qatar, unless it somehow leads to a big order book in the Middle East. The key objective seems to be to give Iberdrola another heavyweight shareholder alongside ACS and Spanish savings bank BBK. That will make it tougher for the Spanish construction company to increase its influence. ACS has been seeking a seat on the board but has so far been shut out by Iberdrola's management. The tussle is now in the courts.

Neither side benefits much from this prolonged battle. ACS's efforts to exert influence take longer and cost more. But Iberdrola shareholders -- Qatar Holdings now included -- will not put up with dilutive deals indefinitely.

CONTEXT NEWS

-- Iberdrola said on March 14 it would sell a 6.16 percent stake to Qatar Holdings for a total of 2.2 billion euros.

-- The Spanish energy group said it would issue 338.4 million new shares plus treasury stock at 5.6 euros a share -- a 5.5 percent discount to the closing share price on March 11.

-- The deal is part of a new package to help finance Iberdrola's recent $2.9 billion purchase of Elektro in Brazil and the buyout of minority shareholders in its renewable listed unit, Iberdrola Renovables.

-- Minorities will now receive 2.978 euros a share in cash plus 0.3 Iberdrola shares for every share in the renewable unit. To procure those shares, Iberdrola will buy back 247.5 million shares in the market.

-- At 1230 GMT, Iberdrola shares were up 1.9 percent at 6.073 euros.