The Battle for Endesa

Wulf H. Bernotat had become CEO  of E.ON, Europe’s second-largest electricity company with the goal of making E.ON a global energy giant. He saw a golden opportunity in 2005 when Endesa, the leading Spanish electricity firm with substantial holdings in Latin America, was put into play following a takeover bid from Gas Natural, its much smaller, Barcelona-based rival. And while Manuel Pizarro, Endesa’s outspoken president, continued to tell shareholders and stakeholders alike that Endesa should remain independent, Bernotat knew the Spanish utility much preferred a deal with E.ON than to be acquired by its smaller local rival. He seized the chance and on February 21, 2006, E.ON offered €27.50 per share of Endesa, €6.20 more than Gas Natural’s bid.

It did not take long for the battle to turn ugly. From day one, Bernotat had faced numerous obstacles, including the Spanish government’s overt hostility to a German company, taking over a powerful Spanish multinational.  The maneuverings by the Spanish authorities prompted a confrontation between the Spanish government and the European Commission and had led to a public sparring match between the Spanish Prime Minister and German Chancellor.

In spite of the conflicts, Bernatat was quite certain that E.ON would prevail, but then Acciona, a family-owned Spanish construction multinational with close ties to the government, announced that it had purchased significant shares of Endesa in the open market, becoming Endesa's largest shareholder.

As he huddled with his strategy team in Düsseldorf in early February 2007, Bernotat pondered his next move. Should he raise E.ON’s bid further to undercut Acciona? How much would he have to pay to secure control? Could he fight Acciona’s entry in the courts? Or had the time come to place a call to Chancellor Merkel in Berlin and openly ask for political support? 

Developed in partnership with IE Business School