A full-blown political row was threatening to engulf E.ON's €29bn (£20bn) bid for Endesa last night after the EU warned the Spanish government not to seek to block a deal between the two energy giants.
The move came as Spain's Prime Minister, Jose Luis Rodriguez Zapatero, said Madrid would only use its golden share to protect Endesa in "exceptional circumstances" and the Italian government weighed in by backing its national energy company Enel in its support for a rival bid for Endesa from Spain's Gas Natural.
After reports in Spain that Mr Zapatero had told E.ON he was seeking legal means of opposing the deal, Brussels warned the Spanish government to stay out of the bid battle. A spokesman for the EU's Internal Market commissioner, Charlie McCreevy, said he "would very much like to remind" Spain not to use its golden share in Endesa to veto the E.ON bid.
The EU, which will have responsibility for vetting any E.ON-Endesa tie-up, is insistent that competing bids for the Spanish company be examined purely on competition grounds.
After Mr McCreevy's intervention, Mr Zapatero said: "It [the golden share] is still in existence and its use would not be advisable except in exceptional circumstances which we certainly do not contemplate."
The Spanish government has made no secret of its desire to see the creation of a Spanish national champion through the merger of Gas Natural and Endesa. It has even gone as far as to override a recommendation from Spain's competition authorities that the merger be blocked on anti-trust grounds.
E.ON's offer is at a 30 per cent premium to the €22.3bn bid fired off by Gas Natural last September. If the rival suitor does decide to challenge E.ON and return with a higher offer for Endesa, then Enel said it might provide its backing. The Italian Industry minister, Claudio Scajola, later said it would work with Enel to support any expansion plans it had in Spain.
The German government, which has already been called on by E.ON to use its influence with Madrid to overcome political opposition to the bid, meanwhile reiterated its position that the bid battle was a purely corporate matter.
As the political sparring continued across Europe, shares in Endesa rose in anticipation of a bidding war, closing 2.5 per cent higher at €28.25 - some 75 cents above the E.ON offer price.Reuse content