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Italy's Enel Boosts Stake in Spain's Endesa Another 7%

AP
Thursday, 1 Mar 2007 | 8:34 AM ET

Italy's former power monopoly Enel announced Thursday that it has boosted its nearly 10% stake in Spain's Endesa by another 7%, through a share swap deal with UBS.

Enel's moves to snap up stock in Spain's No. 1 power utility has threatened German utility E.On's 17-month effort to buy Endesa, a 41 billion euro ($54.24 billion) bid that has been opposed by Endesa's biggest shareholder.

E.On has shown no signs of backing down, but declined to comment on Enel's latest purchase.

Rome-based Enel said Wednesday that it was prepared to boost its holding to nearly 25%, or just under the takeover threshold, if it receives approval from Spain's regulator.

However, Enel did not clarify its intentions when responding to a list of questions posed by Spain's stock market regulator late Wednesday.

Enel said that its role in the management of Endesa would depend on its eventual stake, but that it had "not made any decision" about E.On's attempts to buy Endesa.

Enel announced that it will pay an average price of 39 euros ($51.60) for 74.1 million shares, or 2.89 billion euros, in the share swap transaction with UBS. That was the same share price it paid for 105.8 million Endesa shares earlier this week in a move that surprised industry watchers.

E.On's offer is priced at 38.74 euros ($51.30) a share.

Enel Hinders E.On's Offer

Acciona, Endesa's biggest shareholder, has welcomed Enel's moves because it places a higher value on Endesa than E.On's offer.

E.On's bid faces a crucial hurdle March 20 when Endesa shareholders are to vote on E.On's request that Endesa remove a 10% cap on voting rights for each shareholder, no matter how great the stake. It is a key condition of the offer.

Potentially, Acciona and Enel could band together to help block the change if enough shareholders are absent or share the view.

E.On has accused Acciona of seeking allies to help block its takeover. Enel, which entered the Spanish energy market in 2002 by becoming a shareholder in Enel Viesgo, is now in a position to further expand in Spain.

Analysts and media have speculated that Enel's moves were discussed when the leaders of Spain and Italy met in a summit last week, but Spain's finance minister said Wednesday he wasn't aware of such government contacts.

Enel shares rose 2% to 7.89 euros ($10.42) on the Milan stock exchange, while shares of E.On were down nearly three-quarters of a percent to 98.41 euros ($130.01) in Frankfurt trading.

Spanish authorities have said the stock purchase would need approval from Spain's stock market and energy market regulators.

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