EDP jumps 12% after surprise China bid for Portugal utility

LISBON: Shares of Portuguese utility EDP jumped as much as 12%, topping a bid price offered on Friday by China Three Gorges (CTG), indicating that the market believes there could be a counter bid or a higher offer from the Chinese state-owned utility.

EDP shares rose as high as 3.49 euros, above CTG’s 3.26 euros per share bid, which offered a premium of less than 5% on the firm’s Friday closing price. That values the proposed deal at 9.07 billion euros (US$10.83bil), excluding the 23% stake CTG already owns.

Analysts say the CTG’s bid is relatively low compared to other recent Chinese bids for European energy assets, where Chinese bidders have offered top dollar to outbid European utilities and infrastructure investment funds.

“In our opinion the offer price is too low to be successful,” state-owned Portuguese investment bank CaixaBI said in a note.

Portuguese Prime Minister Antonio Costa told reporters last Friday his government had no objections to the bid, but major funds which hold stakes so far have made no comment. EDP management has also not com- mented. CTG and another Chinese state company, CNIC, together hold 28.25% of EDP shares.

With full control of EDP and its renewables unit EDPR, CTG would become one of the top European renewables players, with a large presence in the United States and Brazilian markets. But other shareholders may balk at CTG’s low bid. “This rise in the shares implies that the offer is very low, which is one of its handicaps,” said Paulo Rosa, a trader at Go Bulling in Porto, adding that “we can’t rule out a competing bid”.