Bloomberg News

Edison Investors Said to Meet EDF as Italians Seek Better Terms

October 26, 2011

Oct. 27 (Bloomberg) -- Edison SpA’s Italian investors will send a representative to Paris today to press Electricite de France SA for a better offer for Italy’s second-largest utility.

Renato Ravanelli, general manager of municipal utility A2A, will meet with EDF representatives hoping to hammer out an agreement before the deadline set for the end of this month, according to two people with knowledge of the matter. A2A, which represents a group holding about 30 percent of Edison’s shares, wants EDF to improve its offer, they said, asking not be identified before today’s meeting.

An agreement would end more than a year of wrangling over the future of Edison. EDF wants majority control of the Italian utility to expand into natural-gas generation, while the Italian partners are ready to sell to help reduce their debt.

EDF, which already owns 50 percent of Edison through direct and indirect stakes, offered to buy the Italians’ stake within three years for a price based on the valuation of comparable listed companies. The French power generator also offered A2A and partner Iren SpA an exchange of their stake in Edison unit Edipower for ownership of Edison’s renewable unit Edens, and an option to buy Edipower’s hydroelectric assets near the northern Italian town of Mese.

“We believe EDF’s proposal is negative for Edison’s minority shareholders,” Goldman Sachs analysts wrote in an Oct. 24 note to investors pointing out that “no visibility” was offered on the value of the offer. “From initial calculations the proposed exchange of assets does not include an attractive compensation” for Italian shareholders.

Review Offer

A2A said in a statement the same day it would review the EDF offer, although it believed an earlier March offer remained on the table.

While preliminary accords reached between the Italian shareholders and A2A in March also called for an option to sell the Edison stake, the division of subsidiary Edipower’s nine power plants was more favorable to the Italians, the people said.

The hydroelectric assets were supposed to go to A2A with other smaller plants and cash going to the other partners, leaving EDF with most of Edipower’s gas plants. A2A feels that the offer of renewable unit Edens and the Mese assets aren’t enough to compensate for the plants contained in the March accords, the people said.

‘Ongoing Negotiations’

“It is impossible to comment on negotiations that are ongoing,” Edison Chief Executive Officer Bruno Lescoeur said at a Senate committee hearing in Rome yesterday.

EDF press officers weren’t available when called and e- mailed yesterday.

The March deal was halted by the Italian government on concern about a foreign takeover of an Italian strategic company. Talks resumed after Italian Industry Minister Paolo Romani and EDF Chief Executive Officer Henri Proglio met on Sept. 5 and agreed to extend negotiations until the end of October.

Edison’s biggest shareholder is Transalpina di Energia, a company half-owned by EDF and half by Delmi SpA, which in turn is owned by A2A and other Italian companies. Transalpina has a 61.2 percent stake in Edison. Taking into account direct and indirect stakes, EDF controls about 50 percent of the Italian utility, while Delmi has about 30 percent.

Edipower is currently 50 percent owned by Edison, 20 percent by A2A, 10 percent by Italian power company Iren SpA, and 20 percent by Swiss energy company Alpiq Holding AG. Alpiq announced on Oct. 24 that it had reached a separate deal with EDF for the sale of its stake in Edipower.

--Editors: Will Kennedy, Tony Barrett

To contact the reporter on this story: Alessandra Migliaccio in Rome at amigliaccio@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net.


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