Acrimony over Endesa bid battle

The bid battle has been soured by claims of Spanish protectionism

The fight for Spanish power firm Endesa has descended into acrimony, after E.ON accused a rival suitor of market manipulation and insider trading.

E.ON, which has made a 42.3bn-euro bid (£28.6bn) for Endesa, said Spain's Acciona and Italy's Enel had acted improperly in trying to mount a bid.

E.ON has urged Spanish regulators to open infringement proceedings against the duo and is suing them in the US.

Neither Acciona nor Enel have yet commented on E.ON's accusations.

'Unlawful actions'

The two firms said on Monday that they intended to make a 43.4bn euro bid for Endesa.

They are prevented from making an approach for six months after investors have made a decision whether to accept or reject E.ON's bid by a deadline of 3 April.

E.ON, which has stalked Endesa for six months, raised its own offer on Monday and its bid was subsequently recommended by Endesa's board of directors.

But E.ON said the announcement of a rival bid was a deliberate attempt to interfere with Endesa shareholders' proper consideration of its offer.

"These unlawful actions were an attempt to deceive Endesa's shareholders and to manipulate the market price of Endesa's stock," it said in a statement.

The likelihood of E.ON succeeding is fading Jordi Padilla, Atlas Capital

E.ON said it was launching legal action against the two firms in the US, saying it believed they had made "misleading disclosures" about their intentions.

It said the two firms should be prevented from making an offer and that they should be forced to sell their existing stakes in Endesa.

Acciona and Enel are now Endesa's main shareholders, controlling 46% of the business between them.

This effectively puts them in a position to block a takeover.

If successful, E.ON's acquisition of Endesa will create one of Europe's largest energy firms.

The flurry of bid activity on Monday sent Endesa shares up 6% but by the close of trade they had dropped 0.4%, while Endesa shares were 3.6% higher.

"The likelihood of E.ON succeeding is fading," said Jordi Padilla, head of equities at Atlas Capital.

"It is not that E.ON's bid is being compared with Acciona/Enel but rather people can now sell at more than the offer price on the open market."

However, late on Monday Spanish bank Caja Madrid said it had settled on a share swap with E.ON for some 10% of Endesa, a move that could improve E.ON's strength in bidding for Endesa.