Energy bid is all about Madrid vs Barcelona
September 16, 2005
By Adrian Croft
Madrid - A huge takeover bid that would reshape Spain's energy sector has fired up rivalry between Madrid and Barcelona, and raised questions over what role regional politics may play in the outcome.
The e22 billion (R171.6 billion) bid by Gas Natural, a Barcelona-based gas distributor, for Madrid-based Endesa, a far larger electricity company, set alarm bells ringing among Spain's centrist right wing. Conservatives see it as a power grab by Catalonia, the prosperous and independent-minded northeastern, whose capital is Barcelona.
The deal would create a Spanish gas and electricity giant, and the world's third-largest private utility. Endesa has pledged to resist.
Spain's two largest cities have long been rivals, whether in business, as centres of culture and tourism, or on the soccer pitch, where Real Madrid and Barcelona usually compete for top honours.
The takeover battle comes at a time when Catalonia's coalition government, which includes a radical nationalist party, is seeking greater powers for the region in a proposed new autonomy statute.
Prime Minister Jose Luis Rodriguez Zapatero's minority Socialist government in Madrid is dependent on regional parties such as the nationalist Republican Left of Catalonia to get his legislation passed.
That has stoked the fears of the centre right Popular Party (PP), which suspects Zapatero of making concessions to restive regions at the expense of Spanish unity.
The head of the Madrid regional government, the PP's Esperanza Aguirre, caused a stir this week by saying she regretted the possible transfer of Endesa "outside national territory", although her office later said this was a slip.
Gas Natural must not only convince Endesa shareholders of the benefits of its offer, it must also pilot the deal through months of scrutiny by competition authorities.
Analysts say the attitude of the Socialist government will be crucial.
Gas Natural tried to buy electricity firm Iberdrola in 2003, when the PP was in power, but withdrew the bid in the face of regulatory opposition.
- Reuters
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