S.2.3. Regional Initiatives

D.2.3. Regional Initiatives

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Shareholders reject €9 billion Chinese bid for EDP

Thursday, April 25, 2019

EDP shareholders have rejected another acquisition bid from China Three Gorges Corporation, despite the latter expressing interest in remaining a long-term strategic investor.

Shareholders in Energias de Portugal (EDP), the largest company in Portugal, blocked a €9 billion takeover bid this week by state-owned China Three Gorges (CTG) Corporation. CTG is already the biggest EDP shareholder with a 23.27% share. CTG claimed that, whatever the outcome of the shareholders’ meeting, it would remain a “long term strategic investor” in EDP.

A voting rights’ reform had been demanded by the Portuguese stock exchange as a condition for the approval of the acquisition. EDP’s current rules prevent any shareholder from holding more than 25% of the voting rights.

In May 2018, CGT launched a takeover bid, offering €3.26 per share, an amount judged too low by EDP. It also launched a bid for EDP’s renewable energy subsidiary EDP Renovaveis.

This comes amid growing unease among many EU Member States with the surge of Chinese State investments in the region. Since 2010, Chinese firms have invested at least €145 billion in European companies, although the pace of investment has slowed in recent years as several European governments tighten rules on acquisitions by foreign firms.

Volvo Cars of Sweden, Pirelli of Italy, French holiday group Club Med and German machine tool firms Kuka and KraussMaffei have all been acquired by Chinese firms this decade. Chinese companies also have significant shareholdings in Portugal’s largest private bank BCP, its principal insurer Fidelidade, and the electric grid management company REN. Chinese firms also have significant holdings in the Greek electricity grid, in the Italian power and gas grids, and the British gas network.