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Endesa in Drive to Fight Off Gas Natural

Posted on: Monday, 26 September 2005, 06:00 CDT

SPANISH power giant Endesa will launch a drive on 3 October to convince investors to reject Gas Naturals E22 ($26.8bn, Pounds 14.7bn) hostile bid. This gives its advisers a week to put the final touches to the companys defence.

Bankers from Deutsche Bank, JP Morgan, Lehman Brothers and Citigroup, the heavyweight consortium hired by Endesa for its defence, will hold intensive meetings in Madrid throughout this week.

Endesa argues that Gas Naturals bid grossly undervalues the company. They say this argument is supported by Fridays E2.2bn acquisition of Banco Santanders 22% stake in Spains third largest power group Union Fenosa by Spanish construction group ACS.

Endesas shares had on Friday traded above Gas Naturals E20.8 per share offer for a full week, while Gas Naturals shares have fallen since it made its offer, which is roughly three quarters in shares. The price ACS paid makes Gas Naturals bid look still more miserly, analysts said.

Gas Natural denied that the ACS bid had any relevance to their offer. A source close to the bid said: Gas Natural believes their price is still the right one. Gas Naturals own transaction has a long way to go before we enter the offer period.

Endesas took its first concrete action to ward off Gas Natural on Thursday when it sent a submission to the European Commission arguing that the commission rather than the Spanish regulator should have jurisdiction over the bid.

Under European law, national regulators take precedence over the European Commission on adjudicating whether mergers are anti- competitive, if the two parties concerned hold more than two-thirds of their assets in one member state.

Endesas bankers disagree with Gas Natural that its offer meets this condition.

Source: Sunday Business; London (UK)

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