The government of Jose Luis Rodriguez Zapatero has reportedly come out against E.ON's shock E29 billion cash offer for Spanish power group Endesa.
Madrid daily El Pais carried reports that the Spanish prime minister has told the German heavyweight that he opposes its bid for Endesa. Such comments would be in keeping with the Spanish government’s earlier comments that it supports the creation of a national energy champion. It is for this reason that the government gave its backing to the Gas Natural-Endesa tie-up.
However sources close to the government have acknowledged that it would be unlikely to intervene to block E.ON’s takeover as this would provoke a major political row and potentially infuriate EU regulators, who are keen to drive forward the liberalization of continental energy markets.
Yet some industry watchers are questioning whether the acquisitive instincts of E.ON are actually furthering this goal. The German giant was rebuffed in its efforts to buy UK player ScottishPower late last year after the Glasgow-based group said E.ON’s GBP11 billion bid undervalued the company. The bid for Endesa has been seen as E.ON attempting to muscle its way into another European market, similar to the UK, where the regulatory climate and level of market opening makes such acquisitions possible.
Reports suggest that the EU may try to use E.ON’s bid for Endesa as a means to pressure the former to open up its home market to greater competition from new entrants, although given that E.ON’s potential expansion into Spain raises few European antitrust issues, it is unclear how exactly Brussels might achieve this.
Endesa’s reaction to E.ON’s approach was lukewarm. The price offered by E.ON clearly improves that of Gas Natural, nevertheless the board of directors considers that it does not adequately reflect Endesa’s real value, the firm said in a statement.
On the other hand, Endesa’s board appraises positively the fact that E.ON’s proposed operation maintains Endesa’s business plan completely without selling any assets, the statement added.