China Three Gorges Corporation (CTG) Launched a Bid to Take Control of World’s Fourth Largest Wind Power Company with a 68.8 Billion RMB Plan
CHINA Three Gorges Corp. (CTG) on Friday launched a bid to take control of Portugal’s biggest company EDP. The total value of the proposed deal is 9.07 billion euros (US$10.83 billion), excluding a 23 percent stake already owned by CTG, the company and largest EDP shareholder said in a statement issued late Friday in Lisbon.
Energias de Portugal (EDP) is an integrated generator, supplier and distributor of electricity. It is also Portugal’s largest business groups and world’s fourth largest wind power company. It also has a major presence in Spain, the United States, Brazil, Africa etc.
In December 2011, CTG won the bidding for the Portuguese government’s 21.35% interest in the company with a premium of 2.69 billion euros and became the largest shareholder of EDP. The transaction is concluded by April 2012 and CTG’s share continued to grow after that.
In September 2017, CTG acquired 7000 more shares and increased its stake to 23 percent.
This time, CTG said in its preliminary offer announcement that it seeks to reach at least a 50 percent voting stake plus one share in the company. It also offered 7.33 euros a share for EDP’s wind power unit, EDP Renovaveis, below its closing price of 7.84 euros.
The proposed offer may test the European Union’s readiness to give control of major infrastructure firms in member states to China, however. It could also run into problems with U.S. authorities since EDP Renovaveis (EDP Renewables) is a major player in its wind energy market.
Another Chinese state company, CNIC, also holds a nearly 5 percent stake in EDP, while other leading shareholders include U.S. financial services company Capital Group, with 12 percent, and U.S. private equity firm Blackrock, which all add difficulty to CTG’s acquisition.
If the deal succeeds, it would be the latest in a series of acquisitions by Chinese companies in Portugal. CTG said it was “fully committed to preserving EDP’s Portuguese identity and autonomy as well as its current Portuguese public listing.” Portugal’s Prime Minister Antonio Costa told reporters earlier that the Portuguese Government had no objections to the bid. “The government has nothing against it, no reservations,” Costa said, adding though that the government does not have to be consulted. “The Chinese have been good investors, be it in REN, EDP or in other sectors … The important thing is that shareholders can ponder on the project. Let the market work.”