EdF voting concession may be enough to win Montedison prize

Just as resistance to EdF’s entry into the Italian power market appeared to be strengthening, the French state-owned energy group may have done enough to allay fears, by voluntarily reducing its voting rights in Italy’s Montedison.

The announcement on Friday that EdF would restrict is voting rights to two per cent of Montedison’s voting stock, despite owing 18 per cent comes at a time when the Italian government has before it legislation aimed at preventing incursions from businesses protected by near-monopoly markets. The bill would place a two per cent limit on the voting rights of any foreign state-owned entity whose market is not open to competition.

In May, EdF belatedly announced that it had gained control of 22 per cent of Montedison’s voting stock but swiftly met with opposition from those fearing a loss of control by Italy over key generating assets owned by the Edison subsidiary.

EdF’s response was to form a new consortium, Italenergia, owned 38.6 per cent by agro-industrial holding company Fiat, 23 per cent by three Italian banks and 20 per cent by Franco-Polish Financier, Romain Zaleski. EdF hold the balance 18 per cent. This consortium has made a 5 bn Euro hostile take-over bid for Montedison and has forced a shareholder meeting to vote on the displacement of the present board on August 9.

The majority stake looked threatened by the Italian government’s proposed law, but EdF has pre-empted this by agreeing to a self-imposed restriction. However, Italy may view this with suspicion since EdF retains full voting rights for some major corporate changes such as capital increases and merger agreements.

It seems that EdF may have done enough, given the governments initial reaction. “The government has no reason to say the decree should apply to Italenergia,” said industry minister Antonio Marzano, a member of the newly elected centre-right government. “We do not believe that (Italenergia) – which is controlled by Italians and has said it will not change its shareholding – will be directly or indirectly controlled by a monopolistic company.”

Italenergia is also awaiting Consob (Italian stock market) agreement to the take-over bid and this may not be a formality if Consob feel that rules on notifications of shareholdings have not been fully complied with.

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