China Three Gorges launches take-over bid for EDP

China Three Gorges has launched a €9Bn cash-up-front take-over bid for Portugal’s energy giant EDP. If it goes ahead, the deal would represent one of the largest acquisitions by a Chinese company in Europe.

 

China Three Gorges, which already has a 23.3% share in the company, would then own Portugal’s largest, once state-owned company.

Named after a dam on the Yangtze River in China, China Three Gorges would secure the 76.7% of the company which it doesn’t yet have.

Shares climbed on the Lisbon Stock Market (PSI-120) by the end of the week to €3.09 — 17.9% above the average for the past six months. The take-over would net shareholders a 5.5% premium to €3.26 a share.

If the deal goes ahead, the total value of the EDP Group would stand at €11.8Bn or €25.6Bn including net debt.

The takeover would require permission form the European Union, the securities market commission (CMVM) in Portugal and the Committee on Foreign Investments in the US. (CFI’s)

In 2011 China Three Gorges purchased its present 23.3% share of the EDP Group in a €2.7Bn deal following Portugal’s bailout by the EU and IMF.

The deal is not without controversy with detractors saying it is yet another example of “Portugal selling off the family silver” but António Costa, Portugal’s prime minister, refuted the notion on Friday saying that his Government had “nothing to oppose”.

“It is up to EDP’s shareholders to accept or reject the bid. The Chinese have been good investors in Portugal,” he said.

“What is important is the plans they have for the company and what its future will be,” said António Costa of the company led by António Mexia.

The second largest EDP shareholder is a group called Capital Group Companies which owns a 12% stake in the energy provider.