* Iberdrola says purchase EPS accretive from first year
* May sell assets, use tariff deficit income to fund buy
* Banks also interested in funding operation
* To propose integrating Elektro with Neoenergia
(Adds comment from conference call)
By Elisabeth O'Leary
MADRID, Jan 20 (Reuters) - Iberdrola, Spain's biggest power utility, said on Thursday its 1.78 billion euros ($2.4 billion) acquisition of Brazilian energy distributor Elektro should boost profit from day one.
Iberdrola has long been looking to expand its operations in Latin America where rapid economic growth contrasts with stagnation in its home market.
Iberdrola already ranks as one of the largest power producers in Mexico and has a 39 percent stake in Neoenergia, the largest power distributor in northeastern Brazil, whereas Elektro serves several municipalities in the southeastern state of Sao Paolo, the country's most populous and wealthiest region.
It is buying 99.68 percent of Elektro's capital from AEI, the investment vehicle controlled by British investment manager Ashmore Group, which took over a number of Enron's former power and gas businesses in Latin America.
Ashmore pulled plans to float AEI in 2009 and has since pursued a series of asset disposals, culminating in the sale on Wednesday of Elektro and interests in nine other operating companies in Latin America and Poland for a total of $4.8 billion.
Iberdrola said the Elektro purchase would be paid for with cash raised from debt or asset sales, "underlining Iberdrola's financial strength and liquidity".
S&P said the purchase did not imply any change in ratings.
Iberdrola would also seek to integrate its new purchase with Brazilian unit Neoenergia, of which it has 39 percent, it said, but no talks had been held prior to the acquisition.
"Due to confidentiality, we've carried out this deal solely as Iberdrola. Now we'll start to talk to our partners about integration possibilities," an Iberdrola executive said on a conference call.
Iberdrola said the purchase price implied it was paying an enterprise value multiple of 5.8 times earnings before interest, tax, depreciation and amortisation (EBITDA), a figure analysts said was reasonable, although it was not immediately clear if that figure takes into account debt or not.
It said Elektro carries debt totalling 369 million euros and had earnings before interest, tax, depreciation and amortisation (EBITDA) of 334 million euros in 2009.
"The acquisition is small in the context of Iberdrola (5 percent of its market cap) and the impact on gearing ratios is marginal," analysts at Goldman Sachs said in a note to clients.
A second analyst, however, did not rule out more purchases which would fit strategically as well as potentially reducing acquisitive Spanish construction group ACS's 20.2 percent stake in Iberdrola.
"This is not a huge purchase and it is digestible. But knowing (Chairman Ignacio Sanchez) Galan, I don't think he'll sit tight and do nothing while (ACS's chairman) Florentino Perez increases his stake," said the analyst. (Additional reporting by Tracy Rucinski; Writing by Greg Mahlich; Editing by Mike Nesbit and Jon Loades-Carter)