German utility E.ON has received a significant boost in its effort to take over Spanish power company Endesa. Recently Endesa’s board has recommended shareholders accept E.ON’s latest improved offer. E.ON has offered €42.4 billion, or $56.3 billion, to the shareholders. E.On claims rivals Acciona and Enel have misled investors over their plans. Now Spanish regulators have ruled that Acciona and Enel must take a back seat until after investors have voted in favor of E.On’s bid.
The decisions of the boardroom followed a day of dramatic events as the Italian energy company, Enel, and the Spanish construction company, Acciona, announced a bid valuing Endesa at €43.4 billion, surpassing E.ON’s offer.
Some experts have deciphered this recent move as a thinly-veiled attempt to block a foreign takeover. The counter bid came soon after E.ON improved on its earlier offer, worth €41 billion - raising its bid for the third time since it entered the battle for Endesa 13 months ago.
Spain’s Gas Natural SDG had launched the first bid for Endesa in September, 2005, and then Germany’s E.ON AG launched a counter-bid. Gas Natural has since withdrawn from the process, however, Italy’s Enel SpA and Spanish construction company Acciona SA had earlier stated that they had agreed on presenting a joint bid for the company. If successful in its bid, it would create one of Europe’s largest energy firms.
In the meanwhile, the European Commission is contemplating whether to take Spain to the EU’s court, the European Court of Justice, over government interference in the proposed merger between German energy group E.ON AG and Spanish peer Endesa SA.
