Electricit�e France (EdF), along with industrial group Fiat and four banks, have launched a bid to take over Italian energy group Montedison. The five billion Euro ($4.2 bn) bid values Montedison shares at 2.82 Euro, and shares were suspended in Milan on the news – having risen ten per cent on Friday whilst rumours of the hostile take-over spread.
EdF increased its stake in Montedison to 20 per cent in May and has been rumoured as wanting to take control of the group, which includes considerable generating assets within its Edison subsidiary. An offer by EdF to act as a strategic partner to Montedison was rebuffed.
The incursion into the Italian utility market has been strongly opposed by the Italian government who took action to block EdF’s voting rights – objecting to French state-owned utility exploitation of Italian privatization compared with the lack of liberalization in the French electricity market.
Montedison on Sunday night said it had sold two stakes in an insurance company and a paper maker for a total of Euro 1.1 bn. This gives the besieged holding company cash it will use to hold on to Edison, the energy division coveted by Fiat and EdF.
In a statement, Fiat said, “for some time it has been studying various projects to enhance the value of its assets in the energy sector.” Fiat’s founding Agnelli family will be part of a grouping, which will hold 33 per cent of Montedison and will be provide a counterbalance to the foreign driven bid.
The EdF/Fiat plan is to create a new company, Italenergia that would be 40 per cent owned by Fiat, with EdF owning 18 per cent. Three Italian banks: San Paolo IMI, Banca Intesa and Banca di Roma along with Deutsche Bank would have a 23 per cent stake.
If Italenergia succeeds in taking control of Montedison, it would be obliged under Italian law to make another take-over offer for the 39 per cent of Edison, the energy company, which Montedison does not already own. That remaining stock is worth Euro 2.7 bn.
The move by EdF would give it a significant foothold in the Italian market which it has not had before and would enable it to challenge the former Italian state monopoly, Enel.