LISBON (Reuters) - China Three Gorges will not change the terms of its takeover bid for EDP-Energias de Portugal utility, the company said on Monday, meaning that if shareholders reject a voting rights reform at their meeting on Wednesday the $10 billion bid will be scuppered.
Portugal’s CMVM market regulator warned the state-owned Chinese firm on April 12 that its takeover attempt of Portugal’s largest company would fail if a motion to scrap a 25-percent voting right limit is rejected by shareholders, unless CTG withdrew the rights cap change as a condition of the bid.
In a statement sent to CMVM late on Monday, CTG said that all the conditions for the launching of the offer remained valid.
“Specifically, if the result of the vote does not allow for the elimination of the rights cap, CTG will not give up on this condition,” the statement said, adding that it would remain a long-term strategic investor in EDP, regardless of the final result of the offer.
Activist investor Elliott, which has a 2.9 percent stake in EDP and has proposed an alternative to CTG’s bid, has called on EDP shareholders to reject the voting reform.
CTG, EDP’s largest shareholder with a 23 percent stake, announced its bid for the utility in May 2018, but the offer has not been formally launched, pending a green light from regulators in various countries. EDP’s board has rejected the 3.26-euro-per-share offer as too low.
Analysts have questioned CTG’s likelihood of moving ahead with the bid because of the long delay to formally launch it and opposition from U.S. authorities to Chinese control of EDP’s sizeable wind energy business in the United States.
Elliott’s alternative plan for EDP to CTG’s bid is based on a proposal to raise 7.6 billion euros from the sale of its Brazilian operation, Iberian thermal holdings and minority stakes in Spanish and Portuguese networks. EDP could then focus on further developing its alternative energy business.
Reporting by Sergio Goncalves and Andrei Khalip; editing by Grant McCool