Endesa Pushes Power Strategy in France as Takeover Bidders Battle

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Researched by Industrial Info Resources (Sugar Land Texas). Although it is the target in one of Europe’s major takeover bidding wars, Endesa (NYSE:ELE) (Madrid, Spain), the Spanish power utility, is pressing on with expansion plans for its strategic power base building plan. It has announced that Endesa Europa, through its French subsidiary SNET, is opening the tender offer period for the selection of the contractor for the construction of two 400-megawatt combined cycle gas turbines (CCGTs) in France that are scheduled to be in operation by the first half of 2009.

In the first week of January, it was reported that the Spanish power conglomerate Acciona SA (ANA.MC) (Madrid) was accelerating its plans to raise its stake in Endesa to a level of 24.9% as Germany’s E.ON (NYSE:EON) (Dusseldorf, Germany) hangs in with its bid ($47 billion in September 2006) and Spain’s Gas Natural (GAS.MC) (Madrid) is still watching and waiting for regulatory finality. Acciona, which has built up its stake in Endesa to 20% since September 2006, claims that E.ON’s bid undervalues Endesa.

The $530 million power project at the Emile Huchet plant in the northeast of France, which is owned by SNET, will increase Endesa’s French subsidiary’s installed capacity by 30%. The increase in demand for power in France warrants the additional capacity.

The plant will be fed by a 35-kilometer gas pipeline that will link the GRT Gaz main gas pipeline to the plant. SNET and Gaz de France Transport have signed a contract to build the $32 million pipeline due to start operation in December 2008.

Endesa Europa currently has six CCGTs in operation in Italy with a combined installed capacity of 2,400 megawatts. The new French plants will form part of Endesa’s strategic plan, which includes an industrial plan for Europe with options for the development of an additional 2,000 megawatts of capacity in France, if demand and price conditions are favorable.

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