Nothing ever seems to happen quickly with European businesses. No great surprise, then, that it's mid-May and we still don't really know whether Germany's E.ON
Clearly Endesa is doing something right; reported first-quarter results looked quite good, companywide EBITDA jumped 31%, and reported net income rose almost 88%. Business was pretty strong across the board -- on the Iberian peninsula, in the rest of Europe, and in Latin America as well.
Endesa is the largest electric utility in Spain and also the largest private utility provider in Latin America. In the latter case, the company has about 10% market share spread through Chile, Argentina, Peru, and Colombia. And while Gas Natural made a prior bid for the company, E.ON easily surpassed that with an all-cash offer that will create a European power giant.
Unfortunately, we're still in the posturing phase of the game. Spanish authorities have squawked about the need for Spanish-ownership of a strong utility company; as though E.ON were somehow going to dismantle Endesa's gear and take it back to Germany. And though the EU has begun legal actions to turn back some regulatory changes designed to potentially block E.ON, this will still take a bit of wrangling to solve.
Ultimately it's the shareholders who have the most to gain or lose, but it seems like Endesa is destined to lose independence one way or another. The only real question now is whether the Spanish government swallows its pride and lets Endesa take the superior bid or somehow forces the company to miss out on this offer.
It'll be interesting to follow the war of words in the coming months, but barring a significant increase in E.ON's bid, I don't see enough potential in the stock to mitigate the risk that the whole thing could either far apart entirely or take much, much longer to sort out.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
