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Spain's Gas Natural Posts Higher 4Q Profit

Posted on: Wednesday, 1 March 2006, 15:00 CST

MADRID, Spain - Gas Natural SDG SA, Spain's biggest natural gas distributor, said Wednesday its profit rose almost 16 percent in the fourth quarter and 17 percent for the full year.

The report came as political controversy continued over its effort to acquire Spain's biggest utility, Endesa SA, which has drawn a higher bid from a German power company.

Gas Natural said it earned 220.3 million euros ($261.6 million) in the last three months of 2005 versus 190.3 million euros the previous year.

For all of 2005, the company said its profit was 749.2 million euros ($889.7 million) compared with 642 million euros in 2004.

Its shares rose 0.4 percent to close at 25.65 euros ($30.46).

Gas Natural had offered 22 billion euros ($26.2 billion) in cash and stock for Endesa. But German energy company E.On AG made a counterbid of 29.1 billion euros ($34.6 billion) for Endesa.

On Tuesday, Gas Natural's board decided to leave its offer for Endesa unchanged and agreed to meet again to "make any necessary decisions relating to the bid," according to a regulatory filing.

Opposition legislators criticized Prime Minister Jose Luis Rodriguez Zapatero on Wednesday for taking steps to potentially block E.On's bid for , Endesa SA. The Gas Natural bid was already cleared by Spanish regulators and had strong political backing from Zapatero's administration.

Zapatero said last week it was in Spain's national interest to have a strong global energy company owned by Spaniards. He also noted the expansion of Spanish energy companies into Latin America during recent years represented a matter of national interest for the Spanish government.

Rajoy said at Parliament's weekly oversight session with senior officials from the executive branch that the government should not block a foreign bid for a power company when Spanish companies such as Endesa have acquired leading market shares in countries such as Argentina or Chile.

"Do you think it would be good if they were to kick us out?" Rajoy asked.

Zapatero said foreign companies invested about 35 billion euros in the country last year and purchased several Spanish companies. Zapatero noted, however, that the German state had veto powers over potential takeovers for E.On.

"We must guarantee equal rules for all EU countries," Zapatero said. He reiterated Spain's energy sector is regulated and, as such, the government has an "specific strategic interest" in it.

Source: Associated Press/AP Online

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