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Endesa Posts Bond to Halt Gas Natural Bid

Posted on: Tuesday, 4 April 2006, 18:00 CDT

MADRID, Spain - Spain's biggest utility, Endesa SA, said it posted a 1 billion euros ($1.2 billion) bond Tuesday with a Madrid mercantile court to temporarily halt a hostile takeover from the country's biggest gas distributor, Gas Natural.

The cash and shares offer of about 22 billion euros ($26.4 billion) will be suspended until the court rules on Endesa's claim that Gas Natural and Spain's second-biggest electricity utility Iberdrola colluded when they agreed to a divestment plan as part of the takeover deal.

The bond also halts a counteroffer of 29.1 billion euros ($34.6 billion) for Endesa made by Germany's E.On AG.

Last November, Endesa alleged that Gas Natural and Iberdrola acted in collusion when the latter agreed to buy between 7 billion euros ($8.55 billion) and 9 billion euros ($11 billion) in Endesa power generation and gas and electricity distribution assets mostly in Spain, Italy, and France as part of Gas Natural's divestment process to address potential antitrust concerns.

The bond was put up as security for possible damages suffered by Gas Natural as a result of the delay while the court looks at the case. Banco Bilbao Vizcaya Argentaria guaranteed 500 million euros ($610.85 million) for the bond, while Banco Santander Central Hispano and Banesto each guaranteed 250 million euros ($305.42 million).

Gas Natural's bid suspension delays E.On's offer because Spain's market regulator has decided to extend the deadline for all bids until authorities rule on each of the offers. But Gas Natural's bid cannot be ruled on until the Endesa's court claim is resolved.

Endesa, however, has said it was prepared ask the court to lift Gas Natural's suspension - but not abandon the court complaint - if E.On's bid were to be approved by authorities. This would allow both bids to run simultaneously.

If E.On's bid is approved and Gas Natural's suspension is lifted, both bids would continue simultaneously.

Gas Natural's bid was approved by the government early in February. E.On formally requested regulatory approval from Spain's energy market regulator late last month, triggering a one-month review of its takeover plans, which has already been delayed once.

E.On has already requested European Commission approval, a review process also expected to last about a month.

Endesa's shares rose 1.8 percent to close at 27.20 euros ($32.89).

Source: Associated Press/AP Online

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