The Financial Times has obtained a report suggesting that the competition authorities in Madrid may throw out Gas Natural’s E22 billion bid for Endesa on the grounds that Gas Natural has prematurely agreed to divest assets as part of the deal.

The report claims that regulators may take a dim view of the power provider’s agreement to sell up to E9 billion of assets to another utility, Iberdrola, before the Endesa takeover has been approved.

The report seen by the Financial Times comes from Spain’s finance ministry, and is being prepared for the country’s Competition Tribunal. The tribunal is likely to support the ministry’s view and block the Iberdrola element of the proposed deal. This would then pose serious questions about Gas Natural’s ability to finance the overall purchase without the E9 billion cash injection, the paper said.