UPDATE:Enel Takes Full Control Of Endesa With Acciona Stake Buy
February 20 2009 - 7:55PM
Dow Jones News
Enel SpA (ENEL.MI) finalized a deal to buy a remaining 25% stake
in Endesa SA (ELE.MC), giving it full control of the Spanish
utility but raising concern over the Italian company's growing
debt.
The deal seals the split after more than 16 months of
disagreements on how to run Endesa.
Spanish energy and infrastructure company Acciona SA (ANA.MC)
will receive EUR11.11 billion in cash and assets for its 25% stake
in Endesa as a result of the deal with Enel, Acciona said in a
filing to Spain's stock market regulator early Saturday.
Acciona will receive EUR8.22 billion in cash, and renewable
energy assets, with a capacity to generate 2,104 megawatts in
electricity, that are worth EUR2.89 billion.
Enel has reportedly lined up around EUR8 billion of financing
from a pool of Italian and Spanish banks to pay the cash
amount.
As a result of the deal, Enel will become solely responsible for
Endesa's strategy. The Italian utility had already spent almost
EUR30 billion to buy a 67% stake in Endesa in 2007, but it had to
jointly run the company with Acciona.
The relationship between the two companies in running Endesa has
been rocky in the past year.
Acciona and Enel squabbled over senior management appointments
and other strategic decisions at Endesa. They also weren't able to
reach an agreement over the setup of a planned renewable-energy
joint venture to merge Endesa and Acciona's renewable assets.
The deal reached Friday puts an end to a saga that started in
September 2005, when the Spanish government brokered an
unsuccessful attempt to take over Endesa by Spanish utility Gas
Natural SDG SA (GAS.MC), followed by attempts by Germany's E.ON AG
(EOAN.XE) to acquire the company, which were blocked by Spain's
government.
As part of the 2007 agreement between Acciona and Enel, the
Spanish company held a put option allowing it to force Enel to buy
out its stake from March 2010 at about EUR41 a share - well above
Endesa's share price of EUR24.21 before its shares were suspended
earlier Friday.
Although Enel can now run Endesa independently, the deal carries
some risks under current tough market conditions because Enel's
already high debt will rise further.
With the deal, Endesa's debt will increase significantly from
EUR50 billion at the end of 2008, with the sale of non-core assets
such as its Italian power lines helping to cut debt.
As part of the deal, Endesa approved a gross dividend of
EUR5.897 per share, or EUR6.24 billion in total for all Endesa
shares, helping the Italian utility to limit the increase in its
debt.
Acciona, meanwhile, will cut its debt considerably. Acciona's
debt was estimated close to EUR17.95 billion at the end of 2008, of
which EUR12.74 billion corresponded to the acquisition and
consolidation of Endesa, Santander said in a recent report. Without
Endesa, Acciona's debt at the end of 2008 would only have been
EUR5.21 billion, the bank estimated.
The Spanish company had a net gain of some EUR1.85 billion from
the sale, according to Dow Jones Newswires calculations. Acciona
has earlier said it plans to use at least part of the gain to
further expand its already sizable renewable energy business.
Last month, Standard & Poor's Rating Services warned it may
downgrade its "A-" long-term corporate credit rating on Enel. It
cited the company's "weak" capital structure, delays in its asset
disposal program and "significant" refinancing risk as some of its
concerns.
The Rome-based utility expects earnings before interest, taxes,
depreciation and amortization, Or Ebitda, to rise to around EUR16
billion in 2009.
Enel said this month that preliminary 2008 Ebitda jumped 45% to
EUR14.2 billion from EUR9.8 billion a year earlier, lifted by the
consolidation of its Endesa stake. Revenue climbed to EUR61
billion, up from EUR43.7 billion in 2007.
The pool of Italian and Spanish banks that are part of the
financing include Mediobanca SpA (MB.MI), UniCredit SpA (UCG.MI),
Intesa Sanpaolo SpA (ISP.MI), Banco Santander SA (STD), Banco
Bilbao Vizcaya Argentaria SA (BBV) and La Caixa, people familiar
with the matter previously told Dow Jones Newswires.
-By Bernd Radowitz and Luca Di Leo, Dow Jones Newswires;
+34-618-526-915; djmadrid@dowjones.com;
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