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22 February 2006
MADRID – Italy’s biggest electricity company is making a bid to join the battle over the Spanish energy firm Endesa.
Enel says if Gas Natural decides to up its bid in response to the EUR 29.1 billion offer by German firm E.ON on Tuesday, it will support it.
E.ON’s offer is EUR 29 billion and is almost 30 percent higher than that which the Barcelona-based company Gas Natural made in September. If the deal goes through, it would create the world’s biggest utility firm with 50 million customers in 30 countries in Europe and the Americas.
On Wednesday, Enel’s managing director Fulvio Conti said: “If Gas Natural intends to relaunch its takeover, we could be at its side in order to continue to have access to that market.”
Enel had already expressed an interest in buying a stake in Endesa back in January. Under the terms of the proposed Gas Natural takeover, launched in September, Gas Natural had to sell some of Endesa.
Conti said a letter had been sent to Gas Natural pledging an immediate payment for promised assets, which could be used to boost Gas Natural’s current financial status.
Meanwhile, the prime minister has promised not to use the government’s veto to halt a possible takeover by E.ON of Endesa.
Jose Luis Rodriguez Zapatero spoke publicly about the German electricity firm’s bid for the first time on Wednesday after meeting with E.ON’s managing director, Wulf Bernotat, the day before.
Zapatero said he had communicated to Bernotat his “worry” about the bid for Endesa. He said the government wanted to respect the rules of a free market, but felt that in a sector as sensitive as the energy sector, the interests of Spanish consumers might be better served by a Spanish provider.
“The markets are very important, but the citizens are more important,” he said.
He pledged not to use the government’s so-called “golden share” in Endesa – which expires in 2007 – to decide the takeover.
The golden share is a mechanism established in 1995 to allow the government to have a say over the control of previously public-owned companies. In November, Zapatero’s government introduced a legal proposal to scrap the mechanism after an EU ruling in 2003 that such an instrument is illegal since it goes against the principle of free movement of capital.
On Wednesday, it also emerged that Zapatero was informed of the takeover bid by E.ON on Monday when the German chancellor Angela Merkel phoned him to inform him of the possible takeover and to register her own support for it.
Endesa’s management, headed by Manuel Pizarro, said the E.ON offer, of EUR 27.5 per share, is better than that of Gas Natural, but still undervalues the company.
Pizarro admitted he had had conversations with E.ON, along with other companies, although he insisted “no commitment whatsoever” had been made.
Gas Natural has insisted it will go ahead with its takeover of Endesa, although it has not stated if it intends to improve its offer.
Experts have widely said Gas Natural is in no position to improve its bid since not only was it EUR 6 below that of E.ON, its offer was also partly in cash and partly in share options.
[Copyright EFE with Expatica]
Subject: Spanish news