(Reuters) - Portugal’s CMVM market regulator has given China Three Gorges (CTG) an ultimatum in its bid for EDP-Energias de Portugal, warning that its takeover attempt of Portugal’s largest company could fail if a reform of voting rights is rejected this month.
In a clarification to the market on the bid by China’s state-owned hydro-power giant CTG, CMVM said that if the motion to scrap a 25-percent voting right limit is rejected at a EDP general assembly meeting on April 24 it could scupper the bid.
Activist investor Elliott, which holds a 2.9 percent stake in EDP and has proposed an alternative to CTG’s bid, has called on EDP shareholders to reject the voting reform.
“An eventual rejection by shareholders of the proposal to change voting rights would imply the non-confirmation of one of the conditions for the launch and registration of the bid for EDP ... which would consequently imply its extinction,” CMVM said. CTG launched its bid for the utility in May 2018 on the condition that a 25-percent voting right limit was scrapped. AllEDP shareholders have to keep to that limit, regardless of the stake they hold. When CTG, EDP’s largest shareholder with a 23 percent stake, launched its bid for the company last year EDP’s board rejected the 3.26-euro-per-share offer as too low.
CMVM said that even if the voting right limit is changed on April 24, CTG will be notified that it has 45 days to complete the conditions - mainly regulatory approvals - necessary to formally launch the takeover offer.
Some analysts have questioned CTG’s likelihood of moving ahead with the bid because of the long delay to formally launch it since first announcing it in May last year.
Elliott has said a rejection of voting reform would not only “put an immediate end” to CTG’s bid, but also give EDP the “certainty needed to plan for the future”.
Elliott’s alternative plan for EDP to CTG’s bid is based on a proposal to raise 7.6 billion euros from the sale of its Brazilian operation, Iberian thermal holdings and minority stakes in Spanish and Portuguese networks. EDP could then focus on further developing its alternative energy business.
By Sergio Goncalves and Axel Bugge; Editing by Susan Thomas