Spain ‘unhappy’ at foreign swoops for power giant

23 February 2006

MADRID — Spain has reacted unhappily to a move by German power giant E.ON to take over the Spanish electricity company Endesa.

Prime minister Jose Luis Rodriguez Zapatero stressed the “strategic” value of the utility for both this Iberian nation and its presence in Latin America.

In his first public comment about E.ON’s EUR 29 billion bid for Endesa, Zapatero argued for reconciling market dynamics and national interests in the context of a European Union whose 25 members have thus far been very protective of “national champions” in the energy sector.

“The markets are very important, but the citizens more so,” the premier told reporters in Madrid.

He said the rules of the market must be made compatible with “a reasonable national interest”.

“This is an open and modern country, but, like all countries, it must also take into account the interests of its citizens and its general interests.”

Stressing his comprehension of Germany’s desire to have a strong energy company to compete in the global arena, the prime minister said that “everyone should understand Spain wants to have a strong company in the energy sector and in the international market.”

The EU is now in the process of deregulating and opening up the member-states respective energy sectors.

Zapatero suggested that Spain’s case is different from that of other EU nations because of the heavy involvement in Latin America by Spanish heavyweights such as Endesa and oil firm Repsol YPF.

E.ON’s chief executive, Wulf Bernotat, said that if the acquisition of Endesa goes ahead,  the combined entity would be Europe’s biggest electric and gas company as well as the world’s largest utility in terms of stock-market value.

He said the expanded firm would have more than 50 million customers in some 30 countries.

Zapatero pledged that despite concerns about E.ON’s bid, his administration would not use Spain’s “golden share” in Endesa to block the deal.

“It is active, but it’s not the government’s intention to use it. It would not be advisable except in exceptional circumstances,” said the Socialist premier, whose administration supports an existing – and almost 30 percent smaller – hostile offer for Endesa from another Spanish company, Gas Natural.

The Spanish government maintains golden shares in several formerly state-owned enterprises, an arrangement that allows officials to ward off a takeover without actually holding any equity in the targeted firm.

EU authorities have already taken Madrid to court over this practice and are now mulling a second suit.

A tie-up between Gas Natural and Endesa would create Europe’s sixth-largest gas and electricity provider, but Spain’s main opposition conservatives oppose the transaction, which they claim is linked to the Socialists’ plans to give greater autonomy to the Catalonia region, where Gas Natural is headquartered.

Zapatero said that he conveyed to both E.ON boss Bernotat and German chancellor Angela Merkel his government’s determination to protect the interests of Spain and its citizens in regard to the proposed purchase of Endesa.

Joining the fray was Europe’s No. 3 utility, Italian giant Enel, which said it is ready to back Gas Natural in making a new and bigger offer for Endesa.

Some in Spain are raising the question of whether a future E.ON-Endesa combination would threaten the positions of other Spanish energy companies, such as Repsol or electricity provider Iberdrola.

It also looked likely that the sniping between the Socialists and the conservatives over the Gas Natural-Endesa deal would color Spain’s political discussions of the foray by E.ON.

[Copyright EFE with Expatica]

Subject: Spanish news