Battle for Endesa

Oct 13 14:39 2013 Jeff Stats Print This Article

Endesa is the acronym of Empresa Nacional de Electricidad S.A. The company is the largest leading utility in the Spanish electricity system. It is a major operator in the European Mediterranean region, particularly in Italy, and develops its activities in other European countries.

Endesa is the acronym of Empresa Nacional de Electricidad S.A. The company is the largest leading utility in the Spanish electricity system. It is a major operator in the European Mediterranean region,Guest Posting particularly in Italy, and develops its activities in other European countries. The company was established in 1944 as Empresa Nacional de Electricidad, S.A. In 1997 it changed its name to Endesa, S.A. September 2004 was marked by enlargement of the company by taking control of the French company SNET (Société nationale d'électricité et de thermique).

In February 2006 the world energy market found out about the possible greatest takeover: the German E.ON announced about its plans to purchase the Spanish Endesa for €29 billion. The idea of the German company was to move forward to the establishment of the single European energy market. There should not have been any problems with antimonopoly officials because the two giants operated parallel to each other: the German E.ON operates mainly in Germany, in the Central and Eastern Europe, as well as in the USA, while Endesa is the leader of the Spanish energy market, has a stronger position in Italy and France and is the principal power supplier in the Southern African countries. Thus, the two companies should have perfectly supplemented each other.

Suddenly a new player appeared: Gas Natural, the largest natural gas supplier in Spain. The amount offered by Gas Natural was higher: €27,5 – 28 per share. The company was even ready to get into depts.

Endesa was unprepared for such a sensation and not happy about either offer. But anyway the E.ON’s offer was more favourable because the company could pay money, while Gas Natural planned to pay partly with its own shares. As for the Spanish government, it was against purchase of Endesa by a foreign investor and wished to keep the energy giant. Anyway it was decided to follow the regulations of the European Union. The first stage of the legislative battle between the Spanish government willing to keep the energy giant under its control and the European Commission ended with the approval of the deal. But this was not the end: the Spanish government was not ready to give up so easily. Moreover the third player suddenly entered the battle: the Spanish construction company Acciona that purchased 10% of Endesa shares and announced about its plans to increase its total share to one forth. E.ON. even went to the court.

The beginning of 2007 brought good news: Gas Natural refused to continue the battle. But there were still shareholders whose consent of the deal was necessary. The two major shareholders, the savings bank network La Caixa (35%) and the oil company Repsol (30%) recommended Gas Natural to pull out of the takeover battle. Acciona and the Spanish savings bank Caja Madrid still didn’t decide. Suddenly one more shareholder, the biggest power company in Italy, Enel, increased its share in Endesa. Enel, with its current stake, together with Acciona and Caja Madrid, a Spanish bank, could control more than half of Endesa's stock, enough to block E.ON's offer. Every further attempt of E.ON to get the controlling stock ended with counteroffer of Enel and Acciona which was more favourable.

In April 2007 the battle was marked by a major positive stage: E.ON agreed to drop its €42.4 billion offer for Endesa in exchange for a promise from rival bidders to sell it part of the Spanish utility's assets. “Under the deal, E.ON will buy assets from Endesa in Spain as well as Enel's Spanish power utility, Viesgo, becoming the No. 4 player in the Spanish market. E.ON will also buy Endesa Italia to become the fourth-largest energy producer in Italy, and Endesa France/SNET” (Burnett).

This deal had quite a long story with numerous players entering and leaving the game. It involved not only businessmen, but legislators as well. The actions of Mr. Wulf Bernotat, CEO of E.ON., were direct and persistent. The businessman realized upon what he was infringing. From my point of view, his strategy was correct, especially in the conditions of the whole deal. Once he had shown his weakness, he would have never get anything out of this deal.

The decisions of all the participants are the best solution to the situation satisfying all the parties. The Endesa deal, which valued the Spanish largest utility at €42.5 billion, was "necessary" to establish Italy's former monopoly as one of the largest players in the European market. 

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Jeff Stats
Jeff Stats

Jeff Stats is a staff writer at http://www.mindrelief.net">college essay writing service Mindrelief. You can order highestquality custom college essay, term paper, and http://www.mindrelief.net "> research paper

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