E.ON 'determined' to buy Endesa, posts strong 2005 results



AFP
DUESSELDORF, Germany
Petroleumworld.com 03 10 06

E.ON, Germany's number one power supplier, remains "determined" to buy Spanish electricity supplier Endesa and believes the business logic of the deal will override political misgivings in Spain, E.ON chairman Wulf Bernotat said Thursday.

"I expect that the advantages of this business deal will be convincing and that political considerations will take a back seat," Bernotat told the group's annual earnings news conference here.

E.ON is offering 29.1 billion euros (35 billion dollars) for Endesa in a bid to become Europe's biggest energy group. But the bid faces fierce opposition from the Spanish government which favours a merger of Endesa and the country's biggest gas supplier, Gas Natural. Endesa, too, is loath to tie the knot with E.ON.

"We're determined to make this acquisition happen," Bernotat said.

And he sought to assuage Spanish fears about the deal.

"Endesa will remain a Spanish company" anchored in Madrid and Barcelona, he said.

Ultimately, it was up to Endesa's shareholders to decide, Bernotat said.

"The state has no power on a market transaction. It's like that even in Spain," he said.

The chairman estimated that 60-70 percent of Endesa shareholders would likely accept E.ON's bid.

And after obtaining a 32-billion-euro credit facility to help finance the acquisition, E.ON had "no intention" of further raising its offer, Bernotat insisted.

E.ON also published strong 2005 results on Thursday, with net profit surging 71 percent to 7.4 billion euros, operating profit up eight percent at 7.3 billion euros on a 21-percent rise in sales to 56.4 billion euros.

E.ON said it would pay a dividend of 7.00 euros per for 2005, which included a special dividend of 4.25 euros.

For 2004, E.ON had paid a dividend of 2.35 euros per share.

The key drivers of profit growth were higher wholesale electricity prices along with increased hydroelectric generation in Scandinavia.

The bottom-line was also boosted by one-off gains from the disposal of share stakes and therefore unlikely to be repeated in the current year, Bernotat said.

Looking ahead to the current year, E.ON said it expected operating profit, as measured by earnings before interest and tax (EBIT), to "slightly surpass the high prior-year level."

However, bottom-line net profit "will not repeat the extraordinarily high net income figure posted in 2005, which resulted from the successful disposal of real estate arm Viterra and the Ruhrgas Industries unit," the company said.

In midday trading on the Frankfurt stock exchange on Thursday, E.ON shares were showing a loss of 1.27 euros or 1.39 percent at 90.28 euros.

AFP 03 09 06

Copyright © 2006 AFP. All rights reserved.

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