€43.4bn offer for Spain's largest electricity firm

Italian electricity group Enel and Spanish construction company Acciona yesterday stepped up their fight for control of Endesa…

Italian electricity group Enel and Spanish construction company Acciona yesterday stepped up their fight for control of Endesa by promising at least €41 a share in cash for Spain's largest electricity utility.

The offer values the target at €43.4 billion, compared with the €42.4 billion bid announced by Eon of Germany just hours before. The prices are almost double what the Catalan utility Gas Natural proposed more than 18 months ago.

The German group's latest pitch - against an earlier €41 billion - will be its final bid. Investors must decide by April 3rd - April 6th in the US - whether to tender their shares to Eon or wait until October for a formal bid by Enel and Acciona, which already control 46 per cent of Endesa.

The CNMV, Spain's stock market regulator, on Friday banned Enel and Acciona from tabling a bid for Endesa until six months after the completion of the Eon tender process.

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The board of Endesa yesterday threw its support behind the German company, describing its bid as "the only one that meets all the requirements of current rules".

However, Enel and Acciona said they had signed an agreement envisaging joint control of Endesa, with the Spanish construction group as lead manager. The accord follows more than a week of intense negotiations, and comes four days after the CNMV asked them to reveal their plans.

The companies yesterday highlighted the "Spanish" nature of a future bid, which is likely to gain the tacit backing of a government opposed to Eon's proposal.

This could add to pressure on the CNMV, which was last night preparing its response to the latest twist in one of the most complex takeover battles yet seen in Europe.

The regulator's decision will be critical, not only for the outcome of Eon's bid but also for the future functioning of the markets, said one lawyer in Madrid.

"If the CNMV allows Enel and Acciona's deferred bid to go ahead, no company will feel obliged to play by the rules in future," the lawyer said. "Spain will never see a contested take­over bid again."

Under Spain's takeover code, which is about to be modified, bidders can present competing bids, and improve on them, for a limited period of time, before presenting their final, binding offers in sealed envelopes.

Eon yesterday asked the CNMV to investigate Enel and Acciona for alleged "market disruption, breach of tender offer rules and insider trading". It called for a ban on any tender offer from the two companies, and said it would open proceedings in New York.

Shares in Endesa yesterday ended up 3.7 per cent, at €40.06. - ( Financial Times service )