Edison SpA (EDN.MI) shareholder A2A SpA (A2A.MI) will hold a management board meeting at 1700 GMT Monday to examine the outlines of an agreement that could give Electricite de France SA (EDF.FR) control of Edison SpA's (EDN.MI), said people familiar with the situation.

While an announcement of a final deal was possible, the most likely outcome Monday appeared to be an agreement by both sides to extend the negotiations for another month to allow the giant French company and the small Italian utility more time to iron out details, according to people familiar with the matter. A key shareholder pact expires Oct. 31, necessitating action today. The two sides have already extended the pact twice this year.

Seizing strategic control of Edison has been a priority for state-controlled EDF, which is looking to diversify from its nuclear-heavy portfolio with the natural gas-rich Edison asset. However, Italian government officials have previously resisted granting the French company control, and the controversy has spurred talks between French and Italian corporate and government leaders in recent months.

Late last week, A2A and EDF issued statements saying: "Constructive proposals were made by all parties to design an agreement that will be presented to the relevant corporate bodies." The statements gave no details.

EDF declined comment Monday.

EDF presently holds about 50% of Edison directly and indirectly, but the French giant has been pushing for more direct control following a series of costly natural gas contracts that have marred Edison's financial performance.

Edison is 61.3% held by Transalpina di Energia, itself 50% held by EDF and 50% by Italian shareholders Delmi, which in turn is led by A2A.

According to a person familiar with A2A's thinking, the agreement calls for EDF to acquire Italian-controlled stake in Transalpina within three years' time at market price, or, possibly, by swapping some of EDF's generating assets in Italy. The deal would eliminate the Transalpina structure and would result in EDF holding about 80% of Edison.

However, the situation remains fluid and two questions that remain on the table are the possible right of Italian minority partners to hold a veto on certain strategic decisions in the future, and the possibility of an Italian chairman for Edison, according to two people familiar with the matter.

On Oct. 24, EDF went public with a proposal to take control of Edison by buying Delmi's Edison shares in three years time and to exchange some assets in a power-generation subsidiary between Edison and A2A and Iren SpA (IRE.MI).

-By Oscar Bodini, MF-Dow Jones, and Jennifer Clark, Dow Jones Newswires; 39 02 58 21 9904; jennifer.clark@dowjones.com

(Max Colchester in Paris contributed to this story.)

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