A second and decisive increase in the offer by the Italenergia consortium for Italian agro-energy group Montedison was accepted by the board on Sunday and may bring to an end the acrimonious take-over battle. A remaining obstacle is a review by the European competition authorities ordered by the Commission late Friday.
Italenergia, the vehicle controlled by Fiat and French state-owned utility Electricità¯¿½e France (EdF), increased its bid to 3.16 Euro from the rejected 3.07 Euro it offered last week. The original offer, which was pitched at 2.82 Euro, was increased last week following discussions with the Consob (Italy’s stock exchange authority), who were concerned that the offer did not comply with its offer rules.
This final offer represents a 30 per cent premium to the 12-month average for Montedison. At a shareholders meeting scheduled for 9 August, control of the group is likely to pass out of the hands of Mediobanca, who up until now have held control though a shareholders pact. Italenergia have 52 per cent of the shares in Montedison, and is made up of Italian banking interests together with those of Fiat and EdF.
The involvement of EdF has been the most controversial aspect of the takeover bid, ever since the French energy group announced in May that it had acquired 20 per cent of the company. A strong backlash against the predatory position of a foreign monopolistic group emerged forcing EdF to sell their interests to the Italian led consortium in which it now has an 18 per cent interest. EdF took the step last week of voluntarily restricting its voting rights in Italenergia to two per cent, although observers believe EdF will increase its position once the political storm has blown over.
Having gained board acceptance of the bid, Italenergia must satisfy the EU that EdF’s position is not in breach of anti-trust rules. European Commission officials notified Italian regulatory authorities and Fiat that the deal constitutes a concentration of EU-wide dimension which must be notified to the Commission in Brussels in a statement late Friday.
EU law prohibits a merger from being put into effect until it has been declared compatible with the common market. Therefore, Italenergia may not exercise its voting rights in Montedison until a final decision is made. EdF has already gained a foothold in the Spanish and German energy markets and has made no secret of its strategic aim to break into the Italian market. The success of the Italenergia bid for Montedison will take them a step nearer creating a serious rival to Italian energy giant Enel.
The Commission is already looking at the terms of an agreement preceding the Fiat-EdF takeover bid for Montedison, whereby EdF swapped a 10 per cent stake in Montedison in exchange for Fiat’s Fenice, an Italian energy services