ITALY - SPAIN : Enel Pays EU4.13 Billion for a 10% Stake in Endesa

by Anthony DiPaola and Kristian Rix (Bloomberg)
Enel SpA, Italy's biggest utility, bought almost 10 percent of Endesa SA for about 4.13 billion euros ($5.47 billion), threatening E.ON AG's takeover of the Spanish power company.

Enel bought 105.8 million shares in Endesa for 39 euros apiece, the Rome-based utility said today in a statement distributed by the Italian stock exchange. Endesa's shares were earlier suspended from trading after the Spanish stock market regulator asked for information about Enel's possible purchase.

The stake may hamper E.ON's yearlong attempt to take over Endesa, Spain's largest utility. The 41 billion-euro bid by the Dusseldorf, Germany-based company may fail because it probably lacks support from a majority of Endesa's shareholders, Spanish Industry Minister Joan Clos said today.

``E.ON is mortally wounded,'' said Enrique Soldevila, an analyst at Banco BPI SA in Madrid. ``They would have to fight a battle that is almost impossible to win.''

Messages left at the office and on the mobile phone of E.ON spokesman Josef Nelles after business hours weren't returned. An Endesa spokesman declined to comment.

Enel said it bought the Endesa shares to bolster its operations in Europe. The company asked UBS AG to execute the share purchase, Efe reported earlier, citing unidentified market sources. Enel was seeking to buy the stake from hedge funds, Efe said. A UBS spokesman declined to comment before the statement and representatives couldn't be reached for comment later.

`Spanish Solution'
European utilities have bought rivals to gain access to customers and generation assets as Europe prepares to open to full competition in July. Enel, which owns Spanish generator Electra de Viesgo SA, is seeking to boost sales outside Italy, where competition rules limit its growth.

A ``Spanish solution'' to the contested Endesa takeover is more likely, Spain's Clos said in remarks to radio station Cadena Ser that were confirmed by one of his spokesmen. Endesa probably will become controlled by a stable group of Spanish investors formed around Acciona SA, owner of a 21 percent stake, he said in the interview.

Spanish investors own about 30 percent of the company, according to Endesa's Web site. Enel is now Endesa's second- largest shareholder, ahead of local lender Caja Madrid, which owns 9.936 percent of the utility, according to the site.

Spokeswomen for Acciona didn't immediately return calls for comment from Bloomberg News. A spokesman for Spain's Industry Ministry, who wouldn't be identified, declined to comment.

Money to Spend
``Enel is very big and like all the big European utilities, they've been very interested in creating an earnings base outside their home country,'' said Barry Abramson, who helps manage shares of Enel and Endesa among $28 billion at Gamco Investors Inc. in Rye, New York. Spain may be ``happy to see someone with a large balance sheet come in who is willing to buy enough to help create a blocking stake in the company.''

Enel Chief Executive Officer Fulvio Conti has earmarked as much as 15 billion euros for acquisitions and development of plants in areas such as Spain, France, Eastern Europe and the Americas, he said in an interview on Feb. 12. The company is able to raise debt to finance acquisitions, he said.

Conti last year abandoned a bid for Suez SA after the French government opposed the transaction. Suez is now seeking to merge with Gaz de France SA.

Enel plans to expand wind-powered generation in France and Spain, bid for state assets being sold in former Soviet-bloc countries and build gas-fired power plants in France and Greece, Conti said. Enel won't make hostile bids for rivals, he has said.

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