On Monday, Dusseldorf-based utility E.ON raised its bid for Endesa to 40 euros ($53.31) per share from 38.75 euros ($51.65) as it struggled to overcome Spanish power behemoth's two largest shareholders.
It's the latest chapter in a long takeover battle. Endesa stock was suspended on Friday ahead of an announcement from Enel--Italy's largest electric utility and a former monopoly--and Spanish construction firm Acciona, which together own 26% of Endesa. The pair admitted they were in talks about a possible joint bid of up to 42 euros ($55.97) per share, in the event that the Germans failed to secure acceptances from shareholders representing 50% of Endesa's equity.
A month ago, E.ON's shares slid in response to signs that its 41 billion euro ($54.24 billion) takeover of Endesa could be in danger after Enel bought a stake in the company. The Italian electricity company, which is hungry for European expansion, said it had taken a 9.9% stake in Endesa, paying 39 euros (then $51.60) per share, or more than $5.47 billion, which is slightly higher than the 38.75 euros (then $51.27) per share E.ON had offered for the company.
Rome-based Enel said that the shareholding acquisition in Endesa was "part of Enel's strategy aimed at strengthening the company's position on the European electricity market." It said it would consider increasing the stake to as much as 24.9%.
E.ON said it was undeterred by Enel's move, pledging its commitment to its pursuit of Endesa. "E.ON will continue with its offer for Endesa in its current form irrespective of the reported purchase of shares by Enel," the company said in a statement. It is continuing with its offer, but not quite in its original form. E.ON's new 40 euro ($53.31) per share offer for Endesa is now worth 42.32 billion euros ($56.40 billion) and will run until April 3 rather than March 29. It is chewing over legal action against Enel and is studying if the Italians' attempts to derail its Endesa offer are illegal.
E.ON may also file a case against the Spanish government. The German company feels it has competed against the state's addiction to protectionism since it launched theoriginal offer for Endesa more than a year ago. A long-standing, albeit unofficial, policy of limiting foreign access to the economy has been popular with the Spanish electorate.
The sweetened E.ON offer may be enough to convince Caja Madrid, a savings bank, to give up its 10% stake in Endesa.
The bidding for Endesa is part of increasing consolidation in the European utility sector, with other deals including the planned merger between Suez and Gaz de France. Enel was preparing a takeover of Suez before being frozen out by a merger arranged by the French government between Suez and GdF.
Germany's E.On Boosts Endesa Bid
by Matt Moore
Germany's E.On AG, fighting to salvage its proposed takeover of Spanish utility Endesa SA, raised its bid by 3 percent Monday to about $56.3 billion _ but Endesa's two biggest shareholders said they would team up to make an even higher offer.
E.On's latest bid of 40 euros ($53.31) a share _ valuing Endesa at 42.4 billion euros _ came after Endesa shareholders Acciona SA of Spain and Italy's Enel SPA had said Friday they were in advanced talks on a possible joint bid for Spain's biggest utility.
Endesa's board of directors recommended Monday that shareholders accept the latest German bid, noting it was up from its previous offer made in February of 38.75 euros ($51.64) a share, or a total of 41 billion euros ($54.64 billion).
"E.On's offer is the only one that complies with all the regulatory requirements and has legal and financial guarantees," Endesa said. "It is also the only bid that has been approved by all the relevant authorities."
Endesa added that 11 of its 13 board members decided to tender their shares to E.On, a combined holding that is less than 0.2 percent of Endesa but wields influence.
On Monday, Acciona said it and Enel would offer at least 41 euros ($54.64) per share for Endesa if E.On fails to secure more than half of Endesa's stock with its current bid.
In a filing with the Spanish regulator CNMV, Acciona said it would launch a bid as soon as it was legally able. The CNMV had said Friday it would not approve any bids prepared either separately or jointly by Acciona and Enel during the next six months.
After Acciona and Enel's announcement Monday, E.On said it would file complaints with the CNMV, arguing that their actions were unlawful and "an attempt to deceive Endesa's shareholders and to manipulate the market price of Endesa's stock."
E.On also said it would ask the CNMV to begin procedures against the companies for breaching the rules of a tender offer, insider trading and market disruptions.
The CNMV said it would issue an opinion on the Acciona-Enel move before Spanish markets open Tuesday.
E.On CEO Wulf Bernotat welcomed the regulator's action on Friday, but said that "this can, however, only be the beginning of further proceedings and investigations which should lead to appropriate sanctions."
The company also demanded that "Acciona and Enel should be forced to divest their shareholdings in Endesa and prohibited from acquiring any Endesa shares."
Enel recently bought a 24.99 percent stake in Endesa _ the maximum it can hold without being required to make a takeover bid _ and Acciona controls 21 percent. E.On needs at least 50 percent for its bid to succeed.
The German company also said it was considering taking legal action against its two rivals in New York.
"E.On is convinced that Acciona and Enel have made misleading disclosures of their plans and arrangements between each other or with other shareholders with respect to Endesa," E.On said.
E.On wants U.S. courts to force Acciona and Enel to make corrective disclosures and prevent the companies from buying more Endesa shares. It also said it believed Enel bought its directly owned 10 percent stake in Endesa in violation of U.S. rules.
Enel did not comment on the E.On claims and Acciona did not immediately return a call seeking comment.
Spain's Socialist government initially attempted to block E.On's bid, preferring a domestic bid from Spain's Gas Natural SA and imposing a slew of conditions on any possible takeover _ most of which were lifted under pressure from the European Commission.
Gas Natural eventually bowed out of the running, but E.On's bid was then complicated by Enel's move to build a stake in Endesa. The Italian and Spanish governments have denied they encouraged Enel to buy the shares.
E.On said its latest tender offer for Endesa would be extended through April 3 in Spain and to April 6 in the United States.
A successful takeover would create a global energy titan.
Endesa has some 11 million customers and sells electricity and natural gas in Europe and South America. E.On has more than 11.6 million customers that use its electricity, natural gas and water services with operations in Britain, the Nordics and Germany. In the United States, E.On operates LG&E Energy.
E.On shares fell 0.4 percent to close at 100.27 euros ($133.25) in Frankfurt, while shares of Enel rose nearly 1 percent to 7.89 euros ($10.48) in Milan. Shares of Endesa rose 3.65 percent to 40.06 euros ($53.23) as they resumed trading after being suspended. Chron
