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Endesa Board Urges Against Gas Natural Bid

Posted on: Tuesday, 7 March 2006, 21:02 CST

MADRID, Spain - The board of Spanish power company Endesa SA made an official recommendation to shareholders on Tuesday to reject a hostile bid from Gas Natural, news reports said.

Until now, the country's biggest utility has not been able to officially make a recommendation to its shareholders, as it needed Gas Natural to first formally submit its bid.

Gas Natural, Spain's biggest gas distributor, did that on Monday.

Endesa has told its shareholders that Gas Natural's 22 billion euro ($26.1 billion) cash-and-stock bid does not reflect the value of the electrical company and is "substantially below" by the Germany energy company E.ON's offer, the state news agency Efe reported.

E.ON recently launched a competing and richer offer for Endesa, a bid of 29.1 billion euros ($34.6 billion).

In its reports to Spain's stock market regulator Endesa says that its current project will generate, in the short and long terms, better value for the shareholders than Gas Natural's, Efe said.

The Spanish government has said it favors the Gas Natural takeover bid.

The EU has warned Spain that steps to block E.ON's surprise bid for Endesa could constitute unfair discrimination against foreign firms.

Recently, the Spanish government passed a decree to expand the scope of its energy regulator's veto power to include deals in which a foreign buyer targets a Spanish energy concern.

Source: Associated Press/AP Online

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