Shoot first, ask questions later

2 March 2007

The worst scenario is that Madrid is merely using Enel to fend off a rival German bid for local utility Endesa. The best outcome might be a friendly Enel/Endesa merger. But jobsharing at the top could lead to Eadsstyle paralysis hardly ideal.

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Italian utility Enel said on Friday that it owned 22% of Endesa through a combination of direct purchases and share swaps. The Italian energy firm has said it wants to buy 24.9% of the Spanish utility, above which it would have to launch a full takeover bid.

Enel bought its shares at an average price of E39 each. German utility E.on has meanwhile said that it remains committed to its E38.75 per share offer, which values the whole company at E41bn.

Under Spanish regulations, Enel will not be allowed to vote more than 3% of its stake as it is partly stateowned. Furthermore, because of its local operations in Spain, Enel is not allowed to have board representation at Endesa.

Enel's Spanish subsidiary Viesgo owns 5% of Spanish generating capacity; by comparison, Endesa has a 39% share.

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