EDP rejects China Three Gorges takeover bid

EDP has rejected a 100% takeover bid from Chinese state-owned hydro-electricity provider China Three Gorges.

Shares had soared by 9% on Monday after the PAO takeover bid netting EDP €1.1Bn from one day’s trading.

The Chinese hydro-electric energy company, which already has a 23% share in EDP, now plans to buy up the rest of the company, including EDP Renewables based in Texas, USA, in what would be the largest Chinese buyout in Europe.

Shares rose 9.32% by the close of business on Monday to €3.40 — in excess of the amount offered by China Three Gorges (€3.26) from the PAO.

It means that the Portuguese energy giant EDP earned €1.1Bn capitalisation on the Lisbon Stock Market (PSI-20) in one day’s trading — 4.29% over and above the amount offered by the Chinese.

EDP believes that the €3.26 offset per share as part of an eventual take-over by the Chinese is too low and undervalues the energy provider and is likely to recommend that shareholders reject the bid.

According to Bloomberg, the EDP Board of Directors is to meet this week to discuss the Chinese proposal. The company headed by António Mexia is working with UBS bank on a defence plan for what could be a hostile takeover.

On Friday China Three Gorges which is controlled by the Chinese State launched a bid for 100% of the largest energy company in Portugal were it has 23.27%. CNIC Co, which is also held by the Chinese State, already owns 28.25% of EDP.