China's Shanghai Electric Power (600021.SS) said on Wednesday it was in preliminary contact with top German utility E.ON (EONGn.DE) over the possible purchase of its Italian assets.

E.ON, whose market value has plunged by nearly three quarters since 2008 on the back of a sluggish European economy, is in the middle of a massive restructuring that will see it split its business in two to focus on renewable energy.

As part of this restructuring plan, the German utility giant is also selling non-core assets such as its operations in Italy. Sources told Reuters on Nov. 5 that the Italian assets could be worth more than 2 billion euros ($2.49 billion).

A Shanghai Electric Power official said the Chinese company was in early stages of communication with E.ON over those assets. She declined to comment further.

A spokesman for E.ON declined to comment on whether the company had been approached by Shanghai Electric Power.

Edison, an Italy-based utility owned by French power giant EDF (EDF.PA), is also interested in E.ON's operations in Italy, a source with knowledge of the matter told Reuters.

These include gas-fired power plants, renewable assets, a hydro generation plant and an LNG terminal.

Earlier this week, E.ON agreed to sell its Spain and Portugal businesses to Australian investment bank Macquarie Group Ltd (MQG.AX) for 2.5 billion euros, two sources told Reuters.

Shanghai Electric Power is not new to deals involving Italy. In May, the state-owned company bought 40 percent of power engineering company Ansaldo Energia from Italian state fund FSI for 400 million euros.

Cash-strapped Italy, for years wary of Chinese takeovers of Italian companies, is now trying to deepen commercial ties in the hope of boosting its sagging economy and replenishing its meager state coffers.

China has already spent well over 5 billion euros buying stakes in some of Italy's biggest companies this year. In October, the two nations signed business deals worth a further $8 billion euros.