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5 February 2007 - The board of Endesa will meet tomorrow to consider its response to a €41bn ($53bn) bid by Eon of Germany in what should mark the final stage of the battle for control of Spain's largest electricity group.
Analysts and people close to the company say directors are likely to recommend the €38.75-a-share offer, which is 41 per cent higher than the original bid presented by Eon almost a year ago.
The Endesa board is also expected to call a meeting of shareholders to vote on changes to company bylaws that limit voting rights to 10 per cent. Eon has made its latest bid conditional on the elimination of the anti-take-over device.
The Eon offer is 12 per cent above what the German group proposed in September, when it was forced to react to stake-building by Acciona, the Spanish construction and energy group that has amassed more than 21 per cent of the target.
Although the bid is slightly below Endesa's closing price on Friday, it is considered by most analysts as sufficient to woo investors who have watched the share price more than double since September 2005, when Gas Natural, the Catalan utility, launched a hostile cash-and-shares bid that valued the target then at €22bn.
Like the Spanish government, Acciona had argued for a "Spanish solution" to the company's ownership after Eon trumped Gas Natural's offer, but it appears to have failed in its quest to gather support for its strategy.
However, with the maximum 10 per cent voting stake, Acciona's vote could still prove decisive when investors meet to approve changes to the bylaws.
Wulf Bernotat, Eon chief executive, alluded to this at the weekend when he described his offer as "both compelling and unique for Endesa shareholders".
He said: "Our offer is based on a revised fundamental valuation of Endesa's business, and demonstrates once again our commitment to bringing this process to a successful conclusion."
Mr Bernotat said that, if successful, the transaction would be earnings-enhancing after the first full year and would deliver returns above the costs of capital three years after its completion.
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