* DONG no longer looking at Oxxio-sources
* Foreign utilities, local competitor interested-sources
* Centrica could fetch up to 240 million euros-sources (Adds DONG, Eni and E.ON no comment, background, details)
By Greg Roumeliotis
AMSTERDAM, Oct 29 (Reuters) - British gas and power utility Centrica expects to launch a formal competitive process for the sale of its Dutch energy supply unit Oxxio in 2010, with sources familiar with talks saying several parties have expressed interest.
A Centrica spokesman confirmed the sale but declined to comment on any bilateral discussions that the company has held.
"No formal sale process is expected until after Christmas, in the new year," the spokesman said.
Several sources familiar with discussions said Centrica has been talking to parties interested in Oxxio, the fourth-largest energy retailer in the Netherlands, since the summer. Some of the discussions were based on asset swaps, they said.
Denmark's DONG Energy was looking at Oxxio but will not be making an offer, two people familiar with the matter said. Other utilities interested in the sale include Belgium's Electrabel, Italy's Eni and Germany's E.ON, sources said.
Officials at DONG, Eni and E.ON refused to comment while an Electrabel spokeswoman did not respond to a request for comment.
The rationale behind a non-Dutch utility buying Oxxio would be based on combining an existing power generation business in the Netherlands with an energy retail network, sources said.
Also interested in the sale of Oxxio is privately-owned Dutch competitor Nederlandse Energie Maatschappij, which would be looking to combine its 400,000-strong customer base with Oxxio's 800,000 customers.
Nederlandse Energie Maatschappij has tapped advisory boutique Sequoia, run by former Merill Lynch bankers, to advise on strategic options, which include teaming up with a utility or private equity firm to bid for Oxxio, or launching an IPO for up to 200 million euros ($294.8 million), according to a person close to the firm.
A Nederlandse Energie Maatschappij spokesman declined to comment.
CUSTOMER LOYALTY
Centrica could fetch up to 300 euros per customer for Oxxio, valuing it at 240 million euros ($354 million), but that would depend on a buyer taking a positive view on the loyalty of its customers and its exposure in the wholesale market, sources said.
Oxxio has a 20-year power purchase agreement with Intergen's gas-fired power plant Rijnmond 2 for which it has an exposure of up to 100 million euros and for which any buyer would have to be prepared to take loss provisions, sources said.
Unlike Nederlandse Energie Maatschappij, which posted earnings before interest and taxes of 9 million euros in 2008, Oxxio has been struggling with its profitability and any buyer would have to restructure to improve margins.
Centrica took a 67 million pound ($110.2 million) charge in 2008 against loss-making Oxxio, and replaced the unit's management, after it swung to a 63 million pound operational loss. It paid 137 million euros for Oxxio in 2005.
Centrica, Britain's largest gas retailer, has been withdrawing from the European energy supply market that it says has been tipped against integrated incumbents.
It is currently in the process of selling its Belgian utility SPE to France's EDF and has said it is looking at divesting other downstream business interests, including Centrica Energia in Spain.
Deutsche Bank is advising Centrica on the sale of Oxxio, sources said. (Additional reporting by Stephen Jewkes in Milan; Editing by Rupert Winchester)