The battle for control of Spain's leading utility Endesa took a surprising new twist last night when a Spanish building group swooped to buy a 10 per cent stake in the company in an apparent attempt to block a hostile takeover by Germany's E.ON.
Acciona, the construction and renewable energy group, asked two banks, Santander and Bear Stearns, to buy shares at €32 each, or 8.8 per cent higher than the value at which Endesa shares closed at yesterday (€29.40).
Acciona, which reported the €3.38bn (£2.3bn) purchase to the Spanish stock exchange watchdog, said it was prepared to raise its share in Endesa to 24.9 per cent, just below the level that would trigger a compulsory bid under Spanish takeover law.
Until a few years ago a small family-owned business run by the Entrecanales family, Acciona is now one of the biggest construction groups in Spain. Under its former chairman, José Manuel Entrecanales, it has expanded on the back of the Spanish building boom. Now it has diversified into renewable energy and is about to build the biggest photovoltaic solar panel plant in the world in Portugal.
Endesa has been the subject of a bitter and hotly contested takeover battle between the Spanish Gas Natural group and the German energy group E.ON.
The move by Acciona comes as the European Commission was today expected to rule the Spanish government acted illegally when it imposed conditions on E.ON's €27bn takeover.
Spain's new industry minister, Joan Clos, has held informal talks in recent days with the European Union Competition Commissioner, Neelie Kroes, to try to stop Madrid from facing legal action in the European Court of Justice.
Madrid provoked the ire of Brussels when in February its energy regulator, the National Energy Commission (CNE), imposed 19 conditions on the German bid, breaking European competition law. Brussels ruled many of the conditions breached treaty rules on the free movement of capital in Europe.
Mr Clos has already agreed to drop many of the 19 conditions imposed on the deal, including the disposal of about one-third of Endesa's assets. Mr Clos said: "European legislation is Spanish legislation and we cannot ignore it at all."
The takeover bid has become a political battle which Spain has lost. The Spanish Prime Minister, José Luis Rodriguez Zapatero, met the German Chancellor, Angela Merkel, earlier this month and agreed Spain would back down over the Endesa controversy in return for support from Berlin for more EU cash aid in dealing with the influx of immigrants from western Africa who have arrived in the Canary Islands this year. Originally, Mr Zapatero had championed the less lucrative bid by the Spanish company Gas Natural for Endesa as a patriotic gesture.
Ms Kroes is understood to be determined to assert the commission's authority over European mergers. The commission approved the E.ON bid in April and it will tell the Spanish government, which favoured the lower Gas Natural bid, that it broke European Unionlaws by ruling on the takeover.
It will be only the second time the commission has imposed its will on an EU member country in this way. In 1999, it overrode Portugal's attempt to block the takeover of the insurer Champalimaud by Spain's Banco Santander. Its ruling will clear the way for E.ON to pursue the Spanish authorities in the courts.
E.ON has indicated it could raise its all-cash bid to secure the Spanish group. The deal would give it greater scale to negotiate fuel supplies with exporting countries such as Russia.