E.ON eyes Endesa minority holding

The battle for Endesa has been hard fought

German power firm E.ON has said it may settle for a smaller stake in Spanish energy firm Endesa - or even drop its bid altogether.

E.ON faces stiff opposition from the Spanish government and shareholders to its 41bn euro ($53.9bn; £27.9bn) bid.

Meanwhile the EU has told the Spanish government it has one week to drop restrictions it has set on the deal or face legal action.

Brussels considers the conditions set by Madrid as having broken EU rules.

'Convince'

E.ON chief executive Wulf Bernotat did not say how many shares his company would want to buy to be happy with a minority stake, but said a majority holding was still desired.

"Theoretically, we can either abandon the project or we possibly accept a minority," Mr Bernotat said.

"We're still trying to convince Endesa shareholders of the advantages of our offer."

E.ON wants to get a foothold in Spain's power market, which has grown seven times faster than Germany's since 1990.

Conditions on a takeover, set by the Spanish regulator, include keeping the Endesa brand for at least five years, only Spanish coal being used in power stations and the stipulation that certain assets cannot be sold off.

The European Commission has already told Spain some of its measures were illegal.

Now it has said that if it is not told that the measures have been withdrawn it may refer Spain to the European Court of Justice.

The developments came as E.ON announced its pre-tax profits for 2006 had climbed 12% to 8.15bn euros.