Spain's energy regulator CNE has given its blessing to Gas Natural's proposed takeover of Endesa, albeit with strings attached.

The nine-member board decided that the combined entity would be sufficiently solvent to invest in the key electricity and gas networks in Spain.

However CNE imposed a number of conditions on its assessment. Among them, the regulator stated that the new company would not be permitted to make dividend payouts until it had assembled adequate resources to fulfil its investment and debt commitments.

Further conditions center on the debt levels the new company will assume. Currently, Gas Natural’s debt is twice its EBITDA, while Endesa’s is four times earnings. CNE says the merged firm’s debt cannot exceed 5.25 times EBITDA. CNE has also pushed for disposals worth just over E8 billion.

Endesa is apparently unhappy with the approval ruling and plans to appeal.