Spain’s Endesa Rejects Takeover Bid

MADRID, Spain – Spain’s leading electricity company, Endesa, on Tuesday rejected a takeover bid by Gas Natural – the second attempt in two years by the country’s biggest natural-gas distributor to create a dominant energy company.

The bid was formulated “in a hostile manner and absolutely without the knowledge of Endesa,” according to an Endesa statement that was issued after a shareholders’ meeting.

“The financial terms of the offer are manifestly insufficient and do not reflect in any way the real value of the company,” the statement said.

Gas Natural said Monday it would offer cash and shares worth 22.6 billion euros ($28.3 billion) to acquire Endesa, a company twice its size.

Spain’s Public Administration Minister Jordi Sevilla told reporters the government was following the bid closely.

Trading in the company’s shares resumed midday Tuesday after the stock exchange suspended trading of the shares Monday before Gas Natural unveiled its takeover bid for Endesa.

Shares in Endesa rose 7.3 percent to 20.48 euros ($25.60) and Gas Natural fell 3.6 percent to 23.91 euros (29.89) in afternoon trading.

Gas Natural, the country’s top gas supplier, said Tuesday it had expected to get clearance and approval from antitrust regulators for its proposed takeover of Endesa, Spain’s top power utility, by February 2006.

It expected to close the acquisition by the end of April.

“We’ll be merging a gas company and an electricity company, not two competitors,” Gas Natural Chief Executive Rafael Villaseca told reporters during a news conference in Barcelona, the would-be headquarters of what would become the world’s third-largest utility in terms of number of clients.

“The transaction establishes us as a global leader with more than 30 million customer accounts in 11 countries,” Villaseca added.

Endesa’s electricity sales have risen in its core markets of Spain and Portugal, as well as in other parts of Europe. Net profits for Europe outside Spain and Portugal increased in the first half of this year, with the liberalization of the Italian market.

Endesa’s 65 percent ownership in French electricity and heating company Snet also helped boost its numbers. Snet’s first-half net profits and sales also grew in Latin America.

For the deal between Endesa and Gas Natural to go through, authorities would have to be reassured the bid was not an attempt by Madrid-based Endesa to actually reverse-acquire the Barcelona-based gas company, one of Catalonia’s richest industrial prizes.

In 2003, Gas Natural unsuccessfully tried a hostile takeover bid for energy firm Iberdrola.