Spain to Compromise on Energy Take-Over

According to FT Deutschland, Spanish premier Jose Luis Rodriguez Zapatero is to present the compromise proposals when he meets German Chancellor Angela Merkel at a bilateral "Spanish-German" summit in Meersburg on Lake Constance Tuesday.

Quoting government sources, the newspaper said that among the concessions Madrid was prepared to make was a reduction in the number of Endesa's Spanish assets that E.ON would be required to sell from 33 percent to 25 percent, the newspaper said.

A disputed bid

As part of its plans to become the world's leading gas and electricity company, E.ON announced in February an offer to buy Endesa for 29.1 billion euros ($37 billion).

But the bid faced staunch opposition from Madrid.

Hostile to the prospect of a cross-border take-over, the Spanish government initially took defensive measures to prevent it and pushed instead for a domestic merger with the country's biggest gas supplier, Gas Natural, which would create a national champion.

Gas Natural made an offer for Endesa of 22.5 billion euros, but its approach was complicated by competition concerns and court action by Endesa.

EU intervention

Earlier this year, the issue resulted in a clash between the Spanish government and the European Commission, after Spain's National Energy Commission attached several thick strings to the deal that would require E.ON to sell approximately one third of Endesa's power generation assets.

The EU suggested that Spain would be breaking anti-trust laws and that the conditions imposed could not be justified as in Spain's national interest.

The EU Commission gave E.ON the green light to press ahead with its takeover plans and announced disciplinary action against Madrid over a decree threatening the deal.

Easing the deal

Amid growing concern about economic nationalism, Spanish Economy and Finance Minister Pedro Solbes signaled last week that his government would be ready to eliminate some of the conditions imposed on E.ON.

Last week, Zapatero himself revealed a compromise might emerge soon over E.ON's disputed ambitions to acquire Endesa.

"There'll be a happy ending for Spain, for Europe, for the energy sector and the electricity industry," Zapatero had told the weekly Die Zeit in an interview.

"There will be a solution. Spain is an open country," Zapatero said.