home
Water Industry News

Enel Will Not Bid for Suez

Simon Wardell

June 12, 2006

Global Insight Daily Analysis

Italian utility Enel has decided against making an offer for Belgian energy group Suez , according to a report in French newspaper Les Echos. The on-again-off-again approach from Enel was widely touted at the start of the year, but no bid came, because France 's state-owned gas company Gaz de France (GdF) hastily launched a pre-emptive bid that quickly gained support from within Suez . The situation caused political tensions between France and Italy , with Enel accusing the French of protectionism. The rival bid from Enel - which never came - has been in the background ever since. There was recently renewed speculation that Enel would make another try, since the GdF-Suez merger has generated some internal opposition in France and Belgium and since the Italian elections put a new government in place (see France : 6 June 2006:). However, citing sources within Enel, Les Echos now says that the company has lowered its sights on Suez subsidiary Electrabel.

Enel will engage in direct talks with Suez to try to pick up a sizeable chunk of the power company, since a merged Suez-GdF will be forced to divest assets on competition grounds. Distirgaz, another Suez subsidiary, is also a possibility. Significance: It now appears that Enel will not in fact launch a rival bid for Suez , although the Les Echos report quoted its Enel source as saying that if there were a deal on Electrabel, there would be no need for a bid. The door is still left slightly open, but Enel knows that any offer would be considered hostile and would pose considerable problems for the company. The focus for Enel is clearly on picking up a sizeable subsidiary, but the main danger for this plan may ironically now be the breakdown of the GdF-Suez merger. French politicians are not at all keen on overturning legislation that guarantees a government majority stake in GdF. The law needs to be changed for the bid to succeed, but French politicians fear a public outcry ahead of next year's elections. Delays here could shelve the merger plan, ending Suez 's need to sell subsidiaries. The merger is still on track, but if Enel is keen on Electrabel, the company will now be hoping for the success of the GdF-Suez deal, in a strange twist of fate.

Google
 
Web Water Industry News