German energy giant E.ON announced on
February 21 that it had offered 29.1 billion euros ($34.8 billion) to acquire
Spain's largest power company, Endesa Electricity Company. The acquisition
could become the largest-ever transaction in the global utility sector.
In recent years, mergers and acquisitions
among energy companies within the EU have continued, which is closely related
to the EU energy market opening policy implemented in 2004. Since 2004, the EU
internal energy market, including the electricity and natural gas fields, has
been open to EU corporate consumers, and companies have the right to The
freedom to choose electricity and natural gas suppliers will promote the
gradual transformation of the European energy market, which was dominated by
state monopolies in the past, towards full openness and market competition. In
July 2007, the EU energy market will achieve full opening in the true sense.
E.ON said it will acquire Endesa at a price
of 27.5 euros per share, and the acquisition will be paid entirely in cash. The
offer exceeds the previous acquisition offer worth 22.55 billion euros made by
Spanish natural gas company by about 30%. It is also the highest cash offer in
Europe.
E.ON is currently the world's largest
electricity and natural gas supplier. If the acquisition is successful, E.ON
will not only occupy a large market share in Spain, Portugal and South America,
but the new company will have total assets of approximately 75 billion euros
and become a customer base with operations in more than 30 countries around the
world. A new energy giant with more than 50 million people.
Endesa welcomed E.ON's offer at a board
meeting held on the 21st. In particular, the condition of the cash payment
increased the interest of board members. This contrasts with the lukewarm
attitude adopted by Endesa's board of directors towards the Spanish gas
company's offer. The acquisition offer of Spanish natural gas company is mainly
in the form of shares. The company first proposed to acquire Endesa in
September last year.
Analysts believe that there are currently
two major obstacles to E.ON's acquisition of Endesa.
First, the Spanish natural gas company will
once again raise its offer price, exceeding E.ON's current purchase price.
On the other hand, the Spanish government
is currently cautious about this transaction. Since the Spanish government owns
a large number of Endesa shares and has previously supported the merger of
Endesa and Spanish natural gas companies, relevant people are worried that the
E.ON transaction will encounter resistance from the government. Spanish Press
Secretary Moraleda said that the Spanish government respects market rules, but
since this transaction involves the important field of energy, it still hopes that
Endesa will be in the hands of Spanish companies.