Elia Is Vattenfall's Preferred Bidder For Power Grid -Sources

Belgian power grid operator Elia System Operator SA (ELI.BT) is the preferred bidder in the sale of Vattenfall Europe AG's (VTT-XE) German power transmission network despite a rival consortium increasing its offer for the assets, said people familiar with the situation Thursday.

The rival consortium, comprising Goldman Sachs Group Inc. (GS), Allianz SE (ALV.XE) and Deutsche Bank AG's (DB) infrastructure fund RREEF, increased its offer for the German power transmission network to around EUR800 million last year, said two people familiar with the matter.

One of the persons said the consortium had previously offered around EUR500 million.

The consortium is competing against Belgian power grid operator Elia, which Wednesday confirmed that it is in talks to acquire a controlling stake in the 9,700- kilometer, ultra-high voltage power grid, which Vattenfall put on the block in summer 2008.

Elia's offer for the Vattenfall grid was higher than EUR650 million reported earlier Thursday by news agency Reuters, one person said but declined to give further details.

Vattenfall Europe, Elia and the financial consortium declined to comment on the matter.

-By Carol Dean and Eyk Henning, Dow Jones Newswires; [phone]; [e-mail]