E.ON wins vital shareholder support

27 March 2007 – Late Monday E.ON AG received welcome support in the fierce €42.4bn ($56.6bn) battle for Endesa SA when the third largest shareholder in the Spanish electricity group voted to align itself with the German utility, according to a report on FT.com.

Caja Madrid, the Spanish savings bank, said it had agreed to cede its ten per cent stake in Endesa to E.ON through an equity swap deal under which it would retain its voting rights for two years. The bank is also assured of receiving E.ON’s latest offer of €40 a share regardless of future movements in Endesa’s share price.

Although not enough to give it 50 per cent of Endesa’s equity, it should help E.ON shore up enough support for a significant minority stake as it shapes up for a legal battle with Enel SpA and Acciona.

The deal came as the Italian electricity group and Spanish construction and energy company stepped up their fight for Endesa by promising investors at least €41 a share. This offer values the target at €43.4bn. This is €1bn more than E.ON’s latest bid, which is said to be its final offer.

Investors must decide by 3 April (6 April in the USA) whether to tender their shares to E.ON or wait until October for a formal bid by Enel and Acciona, which already control 46 per cent of Endesa.

The board of Endesa has given its support to the German company, describing its bid as “the only one that meets all the requirements of current rules”. However, Enel and Acciona said they have signed an agreement envisaging joint control of Endesa, with the Spanish construction group as the lead manager.

The companies highlighted the “Spanish” nature of their future bid, which will guarantee the backing of the Spanish government, which is openly opposed to the takeover of Endesa by E.ON.

This could add to the pressure on the CNMV, the Spanish stock market regulator. A response to the latest twists in one of the most complex takeover battles ever seen in Europe is expected from the regulatory body later today.