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Portugal PM says change to takeover law not related to Chinese bid for EDP

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Portugal PM says change to takeover law not related to Chinese bid for EDP
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LISBON (Reuters) – Portuguese Prime Minister Antonio Costa said on Wednesday that a change in the country’s takeover law last year had nothing to do with a subsequent bid by China Three Gorges for utility Energias de Portugal (EDP), the country’s biggest company.

Costa was responding in parliament after an opposition lawmaker asked if the change had been proposed by Pedro Siza Vieira. Vieira became a cabinet minister in October after previously working for law firm Linklaters, which is representing China Three Gorges (CTG) in its bid for EDP.

Costa also denied the government had any inkling that CTG may bid for EDP when the law was changed last July. CTG launched its bid for EDP this month.

“It was my initiative (to change the law) and aimed to ensure that Portugal would offer the same conditions to foreigners, namely Chinese, as Europeans,” on investments in the country, Costa told parliament in response to the question by centre-right PSD lawmaker Fernando Negrao.

“This (the change) was approved a year ago, when there was no takeover, nor any prediction of a takeover bid.”

The prime minister has said he does not oppose CTG’s bid and the change in the law is further evidence that Portugal welcomes Chinese investment at a time when many European countries and the United States have grown cautious on Chinese investment.

The law change means there is no limitation on how CTG, which already owns 23 percent of EDP, and Chinese state investment company CNIC which holds 5 percent of EDP, vote as shareholders as the takeover bid progresses.

Under the old rules their joint vote could be limited at 25 percent, rather than their combined 28 percent, as they are both ultimately owned by the Chinese state.

Analysts have said the premium on the takeover bid of just five percent is very low. Shares in EDP are trading far above the offer level, suggesting investors believe CTG could raise its bid or there could be competing offers from other countries.

(Reporting by Sergio Goncalves and Axel Bugge; Editing by Susan Fenton)

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