A meeting of Gas Natural’s board of directors has produced no word on whether they intend to increase their offer for Spain’s largest power company Endesa. Gas Natural will have to raise its bid eventually after German’s E.ON topped its original offer.
Its problem is where to get more money for a higher bid; Spain’s stock market regulator has said Gas Natural cannot now add partners in its offer for Endesa. Its German rival, by contrast, is much bigger .. and has much deeper pockets.
E.ON’s market value is 52.6 billion euros compared with Gas Natural’s 1.6 billion. It has nearly 12 times as many employees and its sales in 2004 were eight times Gas Natural’s. E.ON’s difficulty is that it has the cash, but not the political clout.
The Spanish government continues to be opposed to a German takeover on the basis that the strategic nature of the energy sector means the companies must have “a greater link to Spain.” Madrid has changed the rules to make the deal subject to approval by the Spanish energy sector regulator, which will take two months and buys Gas Natural more time.