Expatica news

Chinese bid for EDP fails

edpEDP’s shareholders have blocked a €9 billion bid by China Three Gorges for control of the energy supplier.

US investor Elliott and other shareholders rejected the proposed scrapping of a 25% voting right limit, a condition of China Three Gorges’s (CGT) takeover attempt.

Portugal’s stock market regulator, CMVM stated that any rejection of this proposed change would put an end to the offer that would hand the Chinese state control over one of Portugal’s strategic businesses.

Vulture fund investor, Elliott, which has built a 2.9% stake in EDP, has plans for EDP and wants to raise €7.6 billion by selling its Brazilian operation, Iberian thermal holdings and minority stakes in Spanish and Portuguese networks. EDP then could focus on developing its alternative energy business, according to Elliott.

The bid was always in doubt as the US regulatory authorities had a problem with a communist country controlling a large wind energy business in the United States.

EDP’s CEO, Antonio Mexia, said after the shareholders meeting on Wednesday, “What happened today had to do with this particular offer and not with the company’s future … the partnership with CTG is to be maintained.”

Mexia added that EDP and China Three Gorges will be doing everything to create value for shareholders, with a focus on Latin American operations as the company made a loss from its Portuguese operations last year.

Even though Portugal’s government clearly supported the offer, while sticking to the line that is was a commercial matter, tighter EU regulation cast doubt on the Chinese expansion into key strategic industries.

Portugal’s CMVM market regulator had warned CTG 12 that the bid for EDP would fail if shareholders rejected the change to voting rights, insisted on by China Three Bridges as a condition of its offer. The company refused to give up the condition and now will remain as “a long-term strategic investor in EDP.”