German utility E.ON revealed the size of its bulging war chest but then disappointed investors by not revealing the state of its takeover talks with the UK's Powergen.

The Dusseldorf-based group, formed last year from the merger of German utilities Veba and Viag, said at its annual press conference on Tuesday that it had banked 21bn euros ($18.82bn, �13.1bn) from disposals since it was created.

E.ON has indicated that Spain and the UK are the most attractive European markets for acquisitions

In the UK, E.ON and Powergen confirmed they were in talks in January but chief executive Ulrich Hartmann declined to comment when a conclusion may be reached.

"We have been active in talks for months with Powergen but also with others. On the timing of a result, I can't comment. I can just say that we are in interesting talks," he said.

US plans

Mr Hartmann said E.ON was also considering a direct acquisition in the US rather than using Powergen's US interests as its entry point.

"The American power market is still in the early stages of consolidation. Our experience in deregulated markets gives us a clear competitive advantage in the US," said Mr Hartman.

"Everything is possible," he said.

The war chest

E.ON has sold-off stakes in telecoms and other non-core activities since its formation and industry sources say the group's total war chest could swell to 55.8bn euros ($50bn) if further planned disposals are completed.

The company is seeking investments outside Germany, where tough competition has eroded earnings at its core energy business.

"Our aim is obviously not to invest the funds from our fabled war chest in just any company," said Hartmann.

Operating profit for 2000 edged up only 0.5% to 2.76bn euros ($2.47bn) but E.ON forecast operating profit in 2001 would "markedly exceed" last year's level.