Scottish Southern Energy (SSE) has agreed with Endesa Generaction to buy shares of Endesa Ireland for a total consideration of €320m (£256m) plus an estimated €43m for working capital.
Endesa Ireland's assets include plants in operation, under construction and with consent for development.
SSE finance director, Gregor Alexander, said: "The completion of this acquisition, and of the Phoenix acquisition we announced in May, will make SSE the third largest energy company across the island of Ireland and will take our total investment in energy on the island to around €1.7bn of which half relates to the period since Airtricity became part of SSE in 2008."
The operational assets at four sites include the 620MW Tarbert power station in County Kerry, the 240MW Great Island power station in County Wexford, the 104MW Tawnaghmore power station in County Mayo and the 104MW Rhode power station in Co. Offaly.
SSE will also invest €125m (£100m) to complete the construction of a 460MW combined cycle gas turbine power plant (CCGT) over the next three years with the help of Mitsubishi Heavy Industries.
The acquisition also includes three options, subject to planning permission for the future development of electricity generation plant including a proposed 450MW CCGT plant at Tarbert and two development sites.
The acquisition is expected to be completed within 2012 and is still subject to regulatory approval by the Irish Competition Authority.