Italy’s Enel said it could boost its stake in Endesa to 24.99 percent as it jumped into a takeover battle for the Spanish utility, potentially threatening a –41 billion ($54 billion) bid by Germany’s E.ON. Enel Chief Executive Fulvio Conti said Europe’s third-biggest power utility did not plan a counter-offer to E.ON’s bid.
“We are not planning to counter the E.ON bid,” Conti told reporters on the sidelines of an energy conference in Athens yesterday.
Asked if Enel would raise its stake in Endesa to 25 percent, he said, “We are evaluating the option.” Buying 25 percent of Endesa could trigger a takeover bid under Spanish rules.
Enel bought 9.99 percent of Endesa on Tuesday for EUR4.1 billion its biggest one-off investment outside Italy. It said the move was part of a strategy to strengthen its role in Europe’s electricity market.
“Enel will consider raising its stake in Endesa to 24.99 percent of the share capital, should the company obtain authorization” from Spain’s National Energy Commission, it said.
The purchase price for the Endesa shares was EUR39 each, above E.ON’s offer of EUR38.75.
E.ON said it remained committed to its Endesa offer, which has been staunchly opposed by the Spanish government, trying to keep the country’s largest power company out of foreign hands.
But one by one, E.ON knocked down all the barriers to its bid to create the world’s largest utility, stretching from Russia to Chile. The only hurdle left was a shareholder vote on scrapping a rule that capped voting rights at 10 percent.
E.ON’s main opponent was Acciona, a Spanish conglomerate which has built up a 21 percent stake in Endesa and opposes the German deal. Acciona, a major player in renewable energy, says Endesa would be better off working in partnership with it. As Enel paid more than E.ON’s offer, it was likely to side with Acciona, traders said, leaving E.ON seeking support from other Endesa shareholders.
Acciona said yesterday it had no knowledge of Enel’s plans. Enel said its purchase was aimed at boosting its position in the Spanish and European markets and was done independently from other Endesa shareholders.
Enel shares were weaker amid concerns it was making a costly move that bucked its step-by-step expansion strategy and raised doubts about a potential share buyback.
Regulators lifted a suspension on Endesa trading imposed on Tuesday, and the stock was up 0.4 percent at 38.28 euros.
Italy-Spain link?
Analysts said Enel’s move might be linked to a meeting last week between Spain and Italy’s prime ministers.
Enel is about 32 percent state-owned, but Italian Premier Romano Prodi said on Tuesday he knew nothing about Enel’s decision to buy the Endesa stake.
Pointing to last week’s meeting, ING said in a research note, “We do not believe that CEO Conti is going to make this last-minute entrance into the deal if he does not have a very clear way to get control of the company.”
Enel’s move boosted investor expectations of a renewed push by Spain’s Abertis to take over Italian toll-road operator Autostrade. Italy thwarted a bid for Autostrade last year.
Shares in Autostrade were up 1.7 percent at 21.7 euros and Abertis was off 0.19 percent at 21.30 euros in Madrid.
Spain’s stock market regulator said it had asked Enel to detail how it went about its purchase of its stake.
Enel’s purchase is the Italian utility’s first major move into Western Europe since it gave up on the idea of launching a bid for France’s Suez last year.
Dresdner Kleinwort and UBS are advising Enel.
(Reuters, 28/02/2007)