Endesa bidding war moves closer to resolution

Spanish courts have removed the final legal obstacles to the presentation of takeover bids for Endesa. Madrid judges lifted an injunction against the gas supplier Gas Natural on Wednesday, six days after the Supreme Court also removed the injunction, therefore unblocking Gas Natural's EUR 21 bn cash-and-share offer to Endesa shareholders presented in September 2005. The court decree was very critical with the electricity company Endesa, as said the company 'make use of all it could against Gas Natural's operation'.

A judicial loose end remains: Spanish highest court has to send the resolution approved last week to the Spanish stock exchange agency CNMV. Thereafter, the CNMV needs to approve the re-opening of the bidding process. Once the bidding gets approval, Gas Natural and E.On have five days to present their offers.

German E.On's formal offer is valued at EUR 27 bn, but the group has promised to increase this to about EUR 37 bn when final bids are tabled in a sealed envelope. Eon's latest proposal was announced in September in response to stake-building by Acciona, the Spanish construction and energy group.

A key-meeting of Endesa's shareholders will be held in the end of February. E.ON will try to get rid of the existing rule limiting voting rights of any shareholder to 10%, before formally launching its bid, whilst the Spanish builder Acciona, which opposed the bid since the beginning, will try to get the support of the remaining shareholders. Even if the rule is changed, Acciona may attempt to spoil Eon's tender offer by gathering a hardcore of Spanish shareholders to force the German group to improve its bid or to share power with them.