Italenergia, the consortium created by agro-industrial group Fiat and Electricit�e France as a vehicle to acquire control of Italian energy group, Montedison, has increased its offer by 9 per cent to 3.07 Euro ($2.62) per share. The higher offer follows talks with the Italian stock market regulator Consob and will be considered at a Montedison shareholders meeting scheduled for August 9.
Italenergia is seeking to replace the current board of Montedison, which is controlled by investment bank Mediobanca but has faced stiff opposition largely due to the interests of French state-owned energy group EdF in the consortium. In May, EdF admitted to having built up a 20 per cent stake in Montedison but its position was immediately undermined by the introduction of a temporary law introduced by the Italian authorities, which had the effect of reducing EdF’s voting rights to 2 per cent.
Italians voiced their fears that EdF was entering the open Italian energy market without offering any reciprocal investment opportunities in the French energy market, which has only implemented minimal market liberalization measures. It was argued that EdF enjoyed a quasi-monopolistic position within France and from this position of strength had already made strategic investments in the Spanish, German and UK markets.
EdF’s response was to form Italenergia, a consortium in which it had an 18 per cent interest. The balance was shared between Fiat, Franco-Polish financier Romain Zaleski and various Italian banking interests. Even with an Italian dominated bidder, suspicion remained that EdF would ultimately gain control and as a result the Italian government has been taking steps in the last week to formalise the ‘blocking’ legislation.
Last Friday, EdF announce it would voluntarily reduce its voting rights by taking preferential, but non-voting shares in Italenergia. It did however, retain full powers in matters of mergers and capital issues.
The decision to raise the bid may have been forced upon Italenergia by Consob, who would have carefully examined Italenergia’s compliance with Italy’s complex offer rules. Consortium members tendered their shares into Italenergia at 3.22 Euro per share. Under Italian rules the minimum legal bid is the average of the last 12 months trading average and the highest price paid in the market.
Italenergia’s decision to raise its offer was interpreted by Montedison as suggesting that consortium members had paid above 3.22 Euro per share. On May 11, Montedison shares hit a peak of 3.53 Euro.
Consob is expected to clear the bid as admissible on Tuesday and start the take-over clock running for Montedison. Approval from Consob means the “passivity rule” restricting Montedison from defending itself by selling assets, such as its energy unit Edison, will remain in place during the bid battle. Montedison argues that it has been unfairly restricted from defending itself under the “passivity” rules governing the behaviour of bid targets.
Expectations are for the take-over battle to continue for some while with one or other side resorting to legal action ultimately. At stake is not only the fate of strategically important power generation assets which Italians fear may fall into foreign hands, but also the position of Mediobanca, whose role as leading player in Italian industry is under threat.