Germany's E.ON makes bid for Spain's Endesa
21 February 2006, DUSSELDORF, GERMANY - German energy concern E.ON on Tuesday announced a 29.1 billion euros (34.8 billion dollars) takeover bid for Spain's Endesa in a move that could lead to the creation of the world's biggest gas and electricity company.
21 February 2006
DUSSELDORF, GERMANY - German energy concern E.ON on Tuesday announced a 29.1 billion euros (34.8 billion dollars) takeover bid for Spain's Endesa in a move that could lead to the creation of the world's biggest gas and electricity company.
If approved by cartel authorities, the new energy giant would employ more than 107,000 people and service more than 50 million clients in over 30 countries.
The acquisition represents an important step by E.ON towards "the realization of a uniform energy market in Europe," according to the company's chief executive officer Wulf Bernotat.
"This deal is not just a new dimension for E.ON, it also brings considerable advantages for Endesa and its workforce," Bernotat said in Madrid in remarks broadcast by teleconference in Dusseldorf.
E.ON announced it was willing to pay 27.5 euros per Endesa share in cash, up from 21.3 euros offered by Endesa's Spanish rival Gas Natural in a hostile takeover bid last September.
Taking into account financial liabilities disclosed by Endesa, the deal is expected to cost the Germany company 55.2 billion euros.
E.ON shares jumped 2.4 per cent to 93.44 euros on the Frankfurt Stock Exchange shortly after news of the bid was announced.
Endesa shares rose by 7.89 per cent to 27.49 euros on the Madrid Stock Exchange when trading resumed after a temporary suspension following the announcement of the E.ON bid.
The Germany company said it would formally present its offer to Spain's securities regulator CNMV later on Tuesday.
Sources close to Endesa told the Spanish radio station Cadena Ser that the company would study the offer, which was closer to its "real value" than the bid by Gas Natural, but "still insufficient."
Spanish Prime Minister Jose Luis Rodriguez Zapatero's government earlier this month approved the bid by Gas Natural, overruling objections by competition authorities on the grounds that Spain needed a strong energy supplier to reinforce its economic position and to increase its independence in ensuring energy supplies.
Alfredo Perez Rubalcaba, spokesman for Spain's governing Socialist Party, said the government would study the German bid with "the same criteria" as the Gas Natural bid: "general interest, consumer interest and the strategic character of the sector."
The difference between the two bids was that Gas Natural was based in the Spanish region of Catalonia, while E.ON was a German company, Perez Rubalcaba added.
E.ON chief Bernotat said he was optimistic the deal would meet with the approval of European Union competition authorities.
"We do not envisage any difficulties because there are practically no spheres of activity where the two concerns overlap," Bernotat said.
With 56.4 billion euros in sales last year and around 70,000 employees, E.ON is already the world's largest privately owned energy service provider.
Formed in June 2000 by the merger of VEBA and VIAG, two of Germany's largest industrial groups, E.ON is active in the business areas of power and gas. Its core markets are Central Europe, Britain, the Nordic countries and the US Midwest.
The takeover would open up new markets for E.ON in Latin America and southern Europe. Reports said E.ON was planning to create a new market unit responsible for the two regions based in Madrid.
Subject: German news