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Spain's Top Natural Gas Company Bids for Electricity Leader Endesa

Posted on: Tuesday, 6 September 2005, 15:01 CDT

MADRID, Spain -- Gas Natural, Spain's biggest natural gas distributor, launched Monday what would be Europe's largest takeover bid this year by offering nearly 22.6 billion euros ($28.34 billion) in cash and shares for Endesa, the country's leading electricity company, according to Gas Natural's Web site.

Trading of both companies' shares in the Stock Exchange was suspended pending statements from company executives, media said.

Gas Natural said it was prepared to pay Endesa 21.30 euros ($26.67) per share -- a total of 22.54 billion euros ($28.26 billion).

Calls placed to Endesa seeking comment late Monday went unanswered.

Earlier, however, an Endesa spokesman could not confirm that a bid had been made.

"If they do file a bid, it would be surprising, unsolicited, unexpected and not negotiated," an Endesa spokesman said. The spokesman declined to give his name, in accordance with Spanish practice.

Gas Natural said it would pay 35 percent in cash and 65 percent in shares.

Energy is considered to be one of Europe's fast-moving markets. Endesa's electricity sales have risen in the core markets of Spain and Portugal.

The company's European first-half net profit outside Iberia this year increased thanks to the liberalization of the Italian market and electricity sales grew in Europe and Italy.

Endesa's results also benefited from good figures reported by French electricity and heating company Snet. Endesa took majority ownership of Snet in September and holds 65 percent of the company.

First-half net profit and sales also grew in Latin America.

One of the issues that could have turned the reported bid aggressive was the impression that Madrid-based Endesa, the bigger of the two companies, was actually reverse-acquiring Barcelona- based Gas Natural.

For the deal to go through, the notion would have to be dispelled that this was a raid by Madrid-based capital on one of Catalonia's richest industrial prizes.

Catalonia is one of Spain's wealthiest semiautonomous regions and is sensitive to encroachment by Spanish capital.

Barcelona is the capital of Catalonia and its leaders are keen to exploit the central government's need for their votes to retain a majority in the national parliament.

Source: Deseret News (Salt Lake City)

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