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Gas Natural Reaffirms Bid for Endesa MARKETPLACE By Bloomberg

Posted on: Tuesday, 7 February 2006, 15:00 CST

By Kristian Rix and Paul Tobin

Gas Natural, Spain's largest gas supplier, said Monday that it would go ahead with its proposed 22.7 billion bid for the Spanish electricity group Endesa under the same terms after receiving approval last week from the Spanish government.

Gas Natural accepted the 20 antitrust conditions imposed by Spain on Friday for the takeover, worth $27.2 billion, and will keep the terms of its bid unchanged, said the company's chief executive, Rafael Villaseca.

"We will not modify any of the conditions of our bid," Villaseca said. "We trust the shareholders will understand the situation and accept that our offer is realistic, not based on speculation." But Villaseca may find it hard to persuade Endesa stockholders to sell. Endesa's shares are trading at about 16 percent above the bid value, a sign that investors expect a higher payoff to let Gas Natural gain in size before European utility markets are opened to more competition next year. The value of takeovers in utilities announced in 2005 almost doubled to $235 billion from the total in 2004

Endesa shares dropped 29 cents, or 1.2 percent, to 24.60. Gas Natural shares fell 23 cents to 24.47.

Gas Natural said in a regulatory filing that "the strategic, industrial and financial advantages of the transaction are compatible with meeting the conditions" imposed by the government.

The Spanish government said Gas Natural could proceed with the takeover if it were to sell more assets than it had proposed for the takeover. The conditions include selling 4,300 megawatts of Spanish power plants and shedding 1.5 million gas customers.

To help meet the government restrictions and to raise cash, Gas Natural has agreed to sell to Iberdrola, a power company, plants and distribution networks in Spain and abroad worth up to 9 billion. Villaseca said Monday that its agreement to sell assets to Iberdrola was still valid and that assets to be sold were worth up to 1 billion more than previously estimated. Gas Natural has not held talks with Caja Madrid, the savings bank that is Endesa's largest shareholder, with about 9 percent.

Source: International Herald Tribune

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