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dam-l LS: Endesa Espana Gets Green Linght for Takeover
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Date: May 11, 1999
Subject: Endesa Espana Gets Green Linght for Takeover
Sources: El Mercurio, La Tercera
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ENDESA ESPANA GETS GREEN LIGHT
FOR TAKEOVER
Chile's Antimonopoly Resolution Commission voted 3-2
Monday afternoon to permit Spanish giant Endesa Espana
to proceed with its purchase of an additional 34.7 percent of
energy producer Endesa Chile. Endesa Espana will now
raise its stake in Endesa Chile from 25 percent to 60
percent through its holding company Enersis, in a US$2.1
billion stock purchase expected to begin at 11 a.m. this
morning.
The commission froze the deal on April 30 in order to review
the potential harm vertical ownership of power generation,
transmission and distribution could cause to Chilean energy
consumers. Endesa Chile, which generates 55 percent of
the energy used in the Central Interconnected System (SIC)
power grid, owns 100 percent of Transelec, which
administers SIC's high-tension lines, as well as 75 and 90
percent, respectively, of power distributors Chilectra and Rio
Maipo.
National Economic Prosecutor Rodrigo Asenjo said he
would appeal the commission's decision to the Supreme
Court, a last ditch effort that may yet block the sale. But the
Supreme Court's decision Monday to quash a lawsuit
against the transaction brought by deputies of the governing
Concertacion coalition suggests there is little disposition on
the part of the judiciary to intervene in the matter.
In the divided decision, which had the government's two
representatives voting against the deal, the commission
staked out four conditions designed to limit Endesa
Espana's actions until a final, definitive decision is reached
by the oversight body.
The most important is a prohibition against Endesa Spain's
selling of any of its newly acquired stock in Endesa Chile
until the commission concludes its investigation into vertical
integration in the power industry. This would allow the sale
to be reverted if the commission ultimately rules that the
deal violates Chile's anti- monopoly laws. Other stipulations
require that top management officials and their deputies at
Endesa Chile and Enersis must be replaced by "different,
independent people" and that the two companies must hire
separate, new auditors.
Representatives of Endesa Espana and Spanish government
officials had lobbied heavily against the commission's
intervention in the deal, as did most of Chile's business
community, which said the commission's intervention sends
the wrong signal to international investors. Local media such
as Copesa's La Hora praised Spanish companies for
investing in Chile despite the economic crisis and the
Pinochet case. They offer a "sustaining element of
confidence in the future of our economy," the newspaper
said, "and a basis for arguing that the economic crisis is
near its end."
*Chile Information Project*
*The End*
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Monti Aguirre
Latin American Campaigns
International Rivers Network
1847 Berkeley Way
Berkeley, CA. 94703 USA
Phone: 510 . 848.11.55 and 707 . 591 .91.49
Fax: 510 . 848.10.08
e-mail: monti @irn.org
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