Spain's Iberdrola eyes merger of Brazilian units - report

BRASILIA, April 18 (Reuters) - Spanish power utility Iberdrola is considering merging the operations of two Brazilian companies in which it is a major shareholder and eventually offer shares of the combined companies, newspaper O Estado de S.Paulo said on Tuesday.

Neoenergia SA, in which Iberdrola shares control with two government-led investors, and Elektro Redes SA , almost fully owned by the Spanish firm, have kicked off the merger talks a few weeks ago, O Estado said, citing unidentified sources with knowledge of the talks.

The merger could pose an opportunity for Brazil's state-controlled bank Banco do Brasil SA and its employee pension fund Previ to sell their stakes in Neoenergia, which is Brazil's largest private power distributor, the paper said.

Spokespeople to Neoenergia and Elektro did not immediately respond to emailed requests for comments to Reuters. O Estado said the companies had no comment. (Reporting by Silvio Cascione; Editing by Bernard Orr)