Investors set to reject China Three Gorges’ US$10.8b bid for Portugal’s largest energy firm
Investors expect Three Gorges, which is the biggest investor in EDP, to raise its bid from the current €3.26 a share as they see it as too low
Energias de Portugal (EDP) is poised to reject a €9.1 billion (US$10.8 billion) takeover offer from China Three Gorges on the grounds that it undervalues Portugal’s biggest energy company, according to people familiar with the matter.
The board of EDP, which may meet as early as this week, views the current bid of €3.26 a share as too low as it indicates a premium of 4.8 per cent over Friday’s close, said the people, asking not to be identified because the discussions are private. EDP is also working with advisers including UBS Group and Morgan Stanley on the potential deal, they said.
Representatives for EDP, UBS and Morgan Stanley declined to comment. Representatives for Three Gorges did not immediately respond to requests for comment.
Shares of EDP surged the most in a decade to above the bid level on Monday, signalling that investors expect the Chinese utility, which is its biggest investor, to sweeten the offer to gain full control. For Three Gorges, which spent two decades building a hydropower plant spanning China’s Yangtze River, the deal would bolster its efforts to expand abroad and give it deeper access to markets in Europe, the US and Brazil.
China’s biggest renewable-energy developer already is the largest shareholder of EDP with a 23 per cent stake and now is seeking more than 50 per cent. While the government in Lisbon has indicated it is comfortable with the Chinese offer, it holds out little incentive for shareholders to tender their stock.