Germany's top utility E.ON SE (EONGn.DE) has entered exclusive talks to sell its Spanish activities to Australian infrastructure investor Macquarie Group Ltd (MQG.AX), four sources familiar with the matter told Reuters on Wednesday.

Aiming to cut its 31 billion euro ($38.8 billion) debts and rake in cash for much-needed investments, E.ON has put its operations in Italy and Spain on the block, aiming to retreat from southern Europe after an expected boom in demand failed to materialize.

Binding bids for E.ON's assets in Spain, including 2.9 gigawatts (GW) of thermal plants and 1.1 GW of renewable capacity, were due on Nov. 3 and sources previously said the unit would be valued at between 2 billion euros and 2.2 billion.

One of the sources said on Wednesday Macquarie's bid valued the unit at substantially more than 2 billion euros.

E.ON declined to comment and Macquarie was not immediately available for comment.

The Spanish assets E.ON is looking to sell, which employ about 1,200 staff, also comprise a 32,000 km (19,900 mile) power distribution network, which E.ON has said is alone worth about 0.8 billion euros.

The utility sells power and gas to about 660,000 customers in the country.

Macquarie has emerged as a specialist in the field of European energy infrastructure, attracted by the guaranteed returns power assets offer in times of super-low interest rates.

While primarily buying gas grids, the company has also started to snap up power plants, most notably in Britain, and has said it is looking to expand its portfolio of power assets in Europe.

By selling the unit, E.ON also aims to cut its losses after going on an 11.5 billion euro acquisition spree in 2007 to buy assets in France, Spain and Italy. To date, it has written down about half of those assets.

Sources said last month the sale of E.ON's Italian assets had hit a hurdle and the deadline for binding offers had been pushed back to late November.