6 September 2005 - Spanish utility Gas Natural has made an unsolicited €22.5bn ($28.2bn) takeover bid for Endesa, the country's biggest electricity producer.
The approach was made on Monday and if successful would represent Europe's largest corporate merger this year, forming one of the biggest utility groups in the world with combined assets of more than €60bn in Spain, Portugal, Italy and Latin America. Gas Natural, with market capitalisation around €11bn, would be absorbing a company twice its size and with a debt load almost five times its own.
The board of Endesa has met in Barcelona to plan its defence strategy against an offer of €21.30 per share for a total value of €22.5bn with 65.5 per cent of the offer in shares and the 34.5 per cent balance in cash. "This is a complete surprise - we have had no contacts with Gas Natural on this subject," Endesa said.
The issue of market dominance loomed immediately and the Iberdrola group surfaced with a compromise solution to acquire 20 per cent of Endesa and some gas distribution areas for some €8bn. The companies have so far declined comment on this proposal.
Gas Natural has twice unsuccessfully attempted to takeover Spain's second largest power utility Iberdrola. Analysts have not been surprised by Gas Natural's move as it was well known that the natural gas group wanted to fill a gap in the group and acquire a significant presence in the electricity sector.
Gas Natural is thought to be willing sell €9bn worth of its generation and gas assets, mainly in Spain and Latin America, to Iberdrola in order to appease anti-trust authorities both in the EU and US.
The combined groups would form the fourth-largest energy group in the EU.
Meanwhile, Germany's E.ON, which already owns the UK's Powergen, has said it is considering whether or not to bid for Scottish Power.