Don't you dare, EU tells Spain

The European Union warned Spain yesterday not to block German utility EON's bid for power company Endesa, while Italian company Enel threw its support behind Spain's Gas Natural in its rival offer.

Several of Europe's major power groups voiced interest in the Spanish market after EON jumped into the battle for Endesa on Tuesday with a €29.1 billion ($52.6 billion) cash bid that Endesa said was not high enough.

Endesa's share price, up 44 per cent since smaller rival Gas Natural launched its bid last year, rose further above EON's offer price as investors bet on a bidding war.

Pierre Gadonneix, CEO of French electricity giant EDF, said in an interview with the daily Les Echos that his company was ready to consider major acquisitions and was closely following developments in Spain.

The Spanish Government has been eager to see a powerful national energy company and analysts say it is nervous that a large part of its electricity industry, including 50 per cent of its nuclear power, could fall into foreign hands.

Spain retains a "golden share" in Endesa, allowing it to veto a takeover until June 2007.

But a spokesman for EU internal market commissioner Charlie McCreevy said in Brussels that his boss had reminded Spanish authorities not to use the golden share veto powers, outlawed by the EU's highest court in 2003, to halt the EON bid.

However, state radio quoted a Government source as saying the Government could invoke the 1997 hydrocarbons law that allows Spain's energy regulator to intervene in any deal that affects strategic sectors.

- REUTERS