Gas Natural SGD SA, Spain's largest gas supplier, dropped its €24.8 billion- ($32.3 billion) takeover offer for Endesa SA, leaving E.ON AG as the sole bidder for Spain's largest power company.
The Barcelona-based gas utility's board unanimously voted to end the 16-month pursuit of Endesa SA, the company said in a regulatory filing today. No reason was given. The company's cash-and-stock offer was worth €23.43 a share, 32% below the €34.5 a share in cash that Dusseldorf-based E.ON AG bid. Gas Natural SGD SA lacked the financial strength to beat Germany's largest utility in a battle for control of Europe's third-biggest power producer by installed capacity, with hundreds of plants from Chile to Poland, analysts including Enrique Soldevila at BPI in Madrid said before the announcement.
„It was impossible for them to compete with E.ON and so they've pulled out of a process that made no sense anymore,” Soldevila said. Gas Natural Vice-Chairman Antonio Brufau on January 18 said it was difficult to justify a higher bid for Endesa without more information about the company. He said it was time for Gas Natural to consider other alliances, and that its „privileged” position in Spain's gas market made it an attractive partner.
The pullout today leaves the gas utility without the deal its Chairman Salvador Gabarro last year called „vital.” Spain's stock market regulator would have to decide whether E.ON still has to make a final bid tomorrow as a sole bidder, or whether it will be given more time, said a regulatory spokeswoman who declined to be identified.
Investors are expecting an improved bid. Endesa's shares closed today at €38.41, or 11% more than E.ON's offer. The stock has more than doubled from the €18.56 it was worth on September 2, 2005, the last trading day before Gas Natural's initial bid, as the takeover battle gained momentum and the participants filed more than 30 lawsuits against each other. E.ON's offer may still be threatened by Acciona SA.
Spain's biggest builder bought a 21% of Endesa since E.ON's bid and wants to buy as much as a quarter of the power producer. It has asked shareholders not to tender their shares to E.ON. Spanish savings bank Caja Madrid hasn't announced whether it will sell its 10% stake in Endesa, Spain and Latin-America's largest investor-owned power producer. The tender offer began on January 26 and is scheduled to end February 26. (Bloomberg)