Energy giant's takeover wins the green light
3 February 2006, MADRID – The government has given the thumbs up to a controversial takeover of Endesa by Gas Natural, Spain's largest gas company.
3 February 2006
MADRID – The government has given the thumbs up to a controversial takeover of Endesa by Gas Natural, Spain's largest gas company.
The approval of the EUR 21.7 billion takeover had been largely expected, particularly since early last month when prime minister Jose Luis Rodriguez Zapatero told the newspaper El Pais he would welcome the creation of a "strong energy company".
On Friday, at a cabinet meeting, the government formally agreed the decision, against the advice of the Court for the Defence of Competition, which had said if the bid went ahead it would do "irreparable" damage to competition in the domestic energy market.
It is the fourth time in five years that major Spanish power companies have tried to merge. Three previous transactions were blocked.
At a press conference after the meeting, vice prime-minister Maria Teresa Fernandez de la Vega defended the go-ahead for this union in "the interest of Spain and the Spanish".
She said the government was imposing conditions on Gas Natural which would ensure "an increase in the number of competitors, better quality and a reduction in prices".
She said the new company would be "among the best in Europe", which would reinforce the position of Spain against other countries' energy providers.
In December, the National Energy Commission backed the hostile takeover by Barcelona-based Gas Natural.
It said it would complete a number of conditions in its offer for the nation's biggest power company.
The regulator said a takeover would bring the gas provider a step closer to gaining 11 million domestic power customers.
It would help to compensate for a falling share of its domestic gas market, it advised the government.
When it launched the bid in September, Gas Natural agreed to sell between EUR 7-9 billion of Endesa's assets to Endesa's closest competitor, Iberdrola, to help appease regulators.
Endesa chairman Manuel Pizarro rejected the bid, saying it was not interesting to Endesa investors.
Gas Natural, headed by chairman Salvador Gabarro, has a market value about one-half that of Endesa.
[Copyright EFE with Expatica]
Subject: Spanish news