Italy's Hera to meet merger candidates - source

MILAN, March 14 (Reuters) - Italian regional utility Hera (HRA.MI: Quote, Profile, Research) will start contacts early next week with peers Iride (IRD.MI: Quote, Profile, Research) and Enia (EN.MI: Quote, Profile, Research) about possible tie-ups, a source close to the issue said on Friday.

Hera Chairman Tomaso Tommasi di Vignano will meet Iride and Enia executives under a mandate shareholders gave him this month to look at mergers as a growth strategy, said the source, who spoke on condition of anonymity.

Bologna-based Hera, Italy's second-biggest multi-service utility by market worth, will be looking at a gas and power alliance, or a merger among the three companies, the source said.

Speculation has circulated for months about a tie-up involving Hera, Reggio Emilia's Enia and Genoa-Turin utility Iride.

A scheduled meeting on Monday of the mayors of the cities that control Iride and Enia will be restricted instead to the Genoa and Turin mayors because of Hera's tie-up efforts, the source said.

Municipal utility AEM Milano's takeover of ASM Brescia last year to form A2A (A2.MI: Quote, Profile, Research), Italy's second-biggest power generator, has prompted Hera and others in Italy's wealthy north to look for allies.

Shares in Hera fell 3.11 percent to 2.80 euros as the DJ Stoxx utilities index was off 0.56 percent.

Iride was off 1.09 percent at 2.081 euros. Enia was 0.62 percent firmer at 10.005 euros. (Reporting by Giancarlo Navach; Writing by Ian Simpson; Editing by Quentin Bryar)