Gas Natural spoke to Portuguese PM about merger with EDP

  • ECO News
  • 13 September 2017

Gas Natural wants to reinforce its European presence and has its eyes in EDP. The Spanish company has approached EDP's Chinese shareholders, but has also been in Lisbon speaking with António Costa.

Gas Natural is looking for a partner to create an Iberian giant. One of the alternatives in the Portuguese electricity company EDP. In a trip to China, Isidro Fainé, chairman of the Spanish Gas Natural, has contacted EDP’s largest shareholder China Three Gorges to try to understand what are the options on the table, disclosed the Spanish newspaper Expansión this Wednesday. And more: ECO knows Fainé was in Lisbon a few weeks ago to meet with António Costa. His goal was to convince the Portuguese prime minister of the benefits of a merger between both companies.

EDP is the strongest growth opportunity for Gas Natural, so its chairman Isidro Fainé has been assessing this opportunity for months now. In July, the possibility of a merger between these two companies was brought up, but both denied the rumors.

More recently, the leader of the Spanish company, which is controlled by the group La Caixa (owner of the bank BPI), was in Lisbon and brought to the table a proposal to answer the politic obstacles a merger would bring — starting off with the fact that the merger would be, in practice, an absorption of EDP.  According to ECO, Fainé met with the Portuguese prime minister and made a proposal: after the merger, EDP Renováveis’ headquarters would go from Madrid to Lisbon, while the new headquarters of the merged company would be set in Barcelona, but with a Portuguese CEO in the first mandate. António Mexia is, of course, one of the names on the table — and ECO ascertained the manager likes the terms of the operation.

Officially, there are no comments on the operation. António Costa is said to not have taken any position about the business, more so because EDP is now a private company and has at least two important shareholders: the Chinese from China Three Gorges (CTG) and the American fund Capital Group. This Wednesday, the newspaper Expansión disclosed that Isidro Fainé has met with the Chinese shareholders, who are said to be harder to convince than the Americans.

ECO also knows the main responsible for CTG were in Lisbon two weeks ago to meet the Portuguese PM and President, Marcelo Rebelo de Sousa. The Gas Natural deal was the main issue discussed in the meeting, as well as the negotiation of CMECs (Costs of Maintenance of Contractual Equilibrium) — rents which were considered excessive and which assure EDP’s prices.

The company resultant from the merger between EDP and Gast Natural could have a market assessment of around 31 billion euros, skipping to the fourth position in the top European utilities, according to the sum up of both companies’ capitalization.