EDP-Energias de Portugal sees merits in the plans of suitor China Three Gorges (CTG), it said on Saturday, signalling it may be open to an improved offer after rejecting a 9 billion euro ($10.6 billion) takeover proposal as too low. The board of the Portuguese utility said it could not recommend the current offer from its largest shareholder to other investors, but it would seek more information from CTG.
EDP had said on May 15 that CTG's proposal did not adequately reflect the value of the company, indicating it would not back the offer. EDP's shares closed at 3.376 euros on Friday, above CTG's proposal of 3.26 euros a share, and signalling investors expect a higher or rival bid.
In its detailed response to CTG, the board of EDP said "the implied offer premium is low considering what is customary for European utilities where the offerors have acquired control". It also noted the proposal was below the 3.45 euros paid by CTG in 2011 for a minority stake and the economic and business setting had improved significantly since. Still, all board members who hold EDP shares described as pending their decisions on whether to accept the offer.
The board said it saw merits in CTG's strategic intentions, which include maintaining EDP's Portuguese identity, contributing some overseas CTG assets to EDP and making EDP a key international growth platform for CTG. But it said there were uncertainties about the implementation. "Given the uncertainties regarding the implementation of the plan and potential impact on EDP, the board will seek more information from the offeror in order to be in a position to form a more considered view regarding the value of the project."
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