Antitrust Lawyer Blog Commentary on Current Developments

EU Presses Spain on Endesa Bid

On August 3rd, European Union antitrust regulators asked Spain to explain why it attached conditions to German energy company E.On AG's $34 billion bid for the Spanish utility Endesa SA. Spain's National Energy Commission said last week that it would permit the 26.9 billion euro deal only if E.On sells about a third of Endesa's power generation assets.
The European Commission — which oversees large European mergers — already cleared the bid in April without conditions, saying it would not create competition problems in Spain. EU spokesman Stefaan De Rynck said regulators wanted Spain to explain how its decision was in line with EU competition law.

E.On said it would appeal the ruling that it must sell assets. The company made its cash bid for Endesa after Spain's Gas Natural SA offered 20.87 billion euros ($26.6 billion) in cash and stock.

Spain's Socialist government strongly backs the Gas Natural bid and argues that it is in the national interest to have a strong global energy company owned by Spaniards. Endesa favors the E.On bid but a final decision will be made by Endesa shareholders. Both bids were effectively frozen after Endesa filed more than 30 lawsuits, which resulted in two separate courts granting injunctions on the Gas Natural bid.

EU approval for the deal is also under attack from Spanish electricity company Iberdrola SA, which appealed to the EU's highest courts to overturn it, claiming regulators did not take into account complaints about how the deal would affect the Spanish electricity market. It backs Gas Natural and stands to acquire Endesa assets worth between $8.9 billion and $11.5 billion if that bid succeeds.

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Nicholas Wetzler

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