EDP’s management has not rejected the takeover bid from its largest shareholder, China Three Gorges, but says the price per share being offered does not reflect the energy company’s value.
António Mexia, EDP’s chief executive, says the price per share should be nearer €4 to compensate shareholders (and himself) for allowing the Chinese company to take control.
EDP already has responded to the takeover bid and does not recommend that shareholders sell the shares at the price currently offered, while its board “recognises merit in the strategic intentions of China Three Gorges.”
This leaves the door open for further negotiation with the Chinese. The EDP board wants a premium of between 20% and 30% on the current offer, which would raise the price per share to between €3.91 and €4.23.
It is the personal interests of board members to get a higher price as António Mexia has a pending option to sell 91,000 shares, Miguel Stilwell de Andrade has 140,000 shares and all the other directors have shareholdings.
A report, endorsed by EDP's supervisory board, claims that "the Chinese offer undervalues EDP, taking into account the premiums paid in previous public offers to acquire control."
António Mexia also wants more details about the Chinese proposal, "Given the uncertainties of the potential impact on EDP, the Board of Directors will seek more information to be in a position to form a more informed opinion on the quality of the project."
EDP's board argues that it the company is worth far more than the value attributed by the Chinese as EDP has, “a long and proven history of value creation and operational execution, having increased in the last decade its installed production capacity from 16 GW to 27 GW and recurrent EBITDA from € 2.7 billion to €3.5 billion, net recurring profit of €648 million to €845 million and dividends per share of €0.13 per share to €0.19 per share."
