The company, which is based in Bilbao in northwest Spain, said it was paying £7.77 per share for the agreed takeover of the Glasgow-based company.
Iberdrola has a huge LNG portfolio and last year took delivery of 136 cargoes that were delivered to the regasification plants where the company has capacity at Barcelona, Bilbao, Cartagena and Huelva.
While, Scottish Power has a zero presence in the LNG market, Iberdrola imports the product from Algeria, Nigeria, Egypt, Oman, Qatar and Trinidad & Tobago. However, the UK LNG market is set to grow in the years ahead and Scottish Power could also become a buyer.
Iberdrola, which has interests in Mexico and Brazil and has a cooperation agreement with the Algerian state-owned energy company Sonatrach, will now acquire Scottish Powers power generation and gas storage assets in the US and Canada.
The Iberdola-Scottish power transaction is the latest in a consolidation wave sweeping European energy markets, with Germanys E.ON offering $49Bln for Spain's Endesa and Gaz de France planning the merge with Suez Energy.
Scottish Power was advised by US investment bank Morgan Stanley and Iberdrola was advised by ABN-Amro.
We will be able to achieve prompt synergies and access economies of scale in the medium and long term through common systems and processes, said Ignacio Galán, Chairman of Iberdrola.
The new group will be well positioned for the future European energy market and will enjoy a strong growth platform in Spain, the United Kingdom, Continental Europe, USA and the global market, particularly in renewable energy, a sector in which it will be a world leader, he added.