Court Halts Gas Natural Bid for Endesa

MADRID, Spain – A Spanish court said Tuesday it has suspended the hostile $26.7 billion bid launched by Spain’s Gas Natural for power utility Endesa on grounds that it could violate European Union competition regulations.

The temporary suspension of Gas Natural’s cash and stock bid of about euro 22 billion euros was dictated by a Madrid-based mercantile court in response to a complaint made by Endesa, the country’s top electricity company.

Endesa claims that Gas Natural acted in collusion with Spain’s second-biggest electricity utility, Iberdrola, when the gas distributor agreed to sell assets to Iberdrola as part of a divestment process to address potential antitrust concerns. The side deal was presented by Gas Natural as part of its overall takeover bid for Endesa.

Under the exclusive deal, Iberdrola agreed to pay Gas Natural between 7 billion euros ($8.4 billion) and 9 billion euros ($10.8 billion) for power generation and gas and electricity distribution assets in Spain, Italy, France and Latin America.

The court will rule whether Gas Natural acted in collusion with Iberdrola or if it acted independently when it decided to bid for Endesa.

Endesa was also ordered to deposit a 1 billion euro ($1.2 billion) bond within 10 days to cover potential damages to Gas Natural or Iberdrola stemming from the bid suspension.

Endesa challenged Gas Natural’s bid in several European and Spanish courts, without any success.

This is the first time a court has heard Endesa’s claim in relation to the exclusive side deal with Iberdrola.

Gas Natural formally launched its bid earlier this month after obtaining full clearance from the government. Its offer also faces an all-cash 29 billion euro ($35 billion) counterbid for Endesa launched by German energy giant E.On AG in February.

The court said it had suspended the deals while it investigates Endesa’s appeal.