Efforts to take over Portugal’s biggest company EDP were initiated by China’s state-owned utility China Three Gorges during the end of the week as the Chinese firm offered a premium price of just below 5 per cent of the closing stock price of the power firm.
The CTG already has ownership of 23 per cent of the Portuguese company and a price of 9.07 billion euros ($10.83 billion) has bene offered for the rest of the stock. The present stake of the Chinese firm in EDP makes it the largest stock shareholder of the power firm.
It has been over a year that there have been reports of EDP being a possible target for an acquisition of European foreign companies. During this period, the stake had continuously been risen by CTG and ultimately ended up with a 3.26 euros ($3.89) a share offer.
The aim of CTG is to achieve a 50 percent voting stake plus one share in the Portuguese company, said the Chinese company in its announcement. An offer of 7.33 euros a share for EDP Renovaveis, – EDP’s wind power unit, was also given by the Chinese company.
There were no comments made by EDP. The offer was is likely to be considered as hostile by EDP according to the online edition of the Expresso newspaper.
This deal, if it goes through, would be an addition of a number of similar acquisition by Chinese companies in the European country. Ever since the debt crisis in Portugal 2010-13., Chinese firms have been aggressively gobbling up assets there ranging from infrastructure to insurance and banking.
EDP’s business interests range from generation, supplying and distribution of electricity and it is the biggest company in Portugal in terms of assets. It also has operations in Brazil, United States and Spain.
CTG said it was “fully committed to preserving EDP’s Portuguese identity and autonomy as well as its current Portuguese public listing”.
There are no objections to the deal from the Portuguese government side, Prime Minister Antonio Costa told reporters earlier.
“The government has nothing against it, no reservations,” Costa said, and added that there is no need for consulting the government on the issue. “The Chinese have been good investors, be it in REN, EDP or in other sectors … The important thing is that shareholders can ponder on the project. Let the market work.”
However, one area of contention could be the European Union and this take over would put to test the appetite of the EU in allowing controlling stakes in important infrastructure assts in its member states by Chinese companies. Additionally, because EDP Renovaveis (EDP Renewables) is an important firm in the wind power generation industry in the United States, therefore, the deal could also face challenges here.
(Adapted from Reuters.com)