Current EDP shareholder, the State owned China Three Gorges company, is preparing a €9.07 billion takeover bid for Portugal’s energy company, representing a premium of just under 5% to Friday's closing share price.China Three Gorges currently holds just over 23% of EDP with CNIC, another company owned by the Chinese state, holding almost 5%.
The chairman of EDP, António Mexia, told Businessweek in early April that, despite the Chinese government holding a sizeable stake, he is in control, "We are controlling our destiny, I do not need anyone else to control our destiny, we only need the trust of our shareholders, partners, employees and clients."
CNIC bought almost 2% of the power plant at the end of 2017 and now holds almost 5%. With 28.25% of the capital controlled by the People's Republic of China, its government was coming close to owning 33.33% at which point is would have to make a bid for the business.
There remains the distinct possibility that EDP's board of directors will classify this takeover bid as 'hostile' but António Costa’s government will not impede a takeover, according to Expresso, and there are few, if any, regulatory hurdles. However, the deal may test the European Union’s willingness to allow control of member states' infrastructure companies to China. The deal also could have problems with US authorities as EDP Renovaveis (EDP Renewables) is a major force in the US wind energy sector.
EDP has a market value of €11.37 billion and debts of €13.8 billion (HERE) but has remained attractive, especially to Spain’s Gas Natural Fenosa whose president, Isidre Fainé twice has been spotted in Lisbon to hold bid talks.
France’s Engie was the last company suspected of preparing a bid but nothing yet has happened.
The Securities Market Commission (CMVM) on Friday suspended trading in EDP and EDP Renováveis shares pending the release of relevant bid information.
The suspension came after the stock exchange closed and following the announcement by Expresso that a Chinese consortium intends to launch a takeover bid for EDP.
China Three Gorges has offered €3.26 a share for EDP and seeks to hold at least a 50% voting stake, plus one share, in the company. It also offered €7.33 a share for EDP’s wind power unit, EDP Renovaveis, an offer pitched below its Friday closing price of €7.84.
