June 16, 2008 / 8:13 AM / 11 years ago

EU clears Enel-Acciona bid for Endesa

BRUSSELS (Reuters) - Italy’s Enel and Spain’s Acciona won approval from the European Commission on Monday to buy Spanish utility Endesa for 42.5 billion euros ($65.3 billion) in a deal overshadowed by a continuing fight between Brussels and Madrid.

The fate of Endesa (ELE.MC) has been changed while the European Commission and Spain fought over which has the authority to clear such mergers.

Spain has lost every step of the way, arguing unsuccessfully before EU courts that it can impose its own conditions on large, cross-border mergers, over and above any decision made in Brussels. The courts have backed Brussels’ exclusive authority.

The delays allowed Endesa to slip out of the hands of E.ON and into the waiting laps of Enel (ENEI.MI) and Acciona (ANA.MC), a Spanish infrastructure group.

The latest decision is little more than a footnote to the bigger fight.

The EU’s competition department earlier gave the green light to the Enel-Acciona buy, but the deal was resubmitted after Enel and Acciona changed an agreement on selling some Endesa assets to E.ON EONG.DE of Germany, the Commission said.

“This new agreement excludes one of Endesa’s power plants that was to be divested to E.ON (the Foix power plant in France) and substitutes one power plant in Spain (Besos 3) for another one (Tarragona 1),” the Commission said in a statement.

Major divestitures were a condition of the deal imposed by the European Commission.

In addition, the Spanish government had imposed its own conditions and that is what created legal and business problems.

Last month, the Commission ordered Spain to drop by mid-June the conditions it imposed on the Endesa takeover and threatened to take action at the EU’s highest court if it did not comply.

The Madrid government has yet to say definitively that it will drop the conditions, but its prospects to end a losing streak in court are poor.

In May the president of the EU’s second-highest court, the Luxembourg-based Court of First Instance, swept aside a request by Spain for emergency measures to halt the Commission from enforcing its rules while Spain challenged them.

That followed a ruling against Spain in March by the highest EU court, the European Court of Justice, based on essentially the same facts.

The only difference was that the case before the high court involved the earlier, failed attempt to take over Endesa by


E.ON bid to buy Endesa in early 2006 but the conditions imposed by Madrid — the same ones eventually thrown out by the high court — slowed things down and allowed Enel and Acciona to overtake E.ON in bidding.

Editing by Sue Thomas

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