On 4 August, EDP announced it had increased its stake in EDPR from 77.53% to 82.6%, well short of the 90% target, which, according to the prospectus issued by the Portuguese generator in July, would have allowed it sweep up the remaining minority shares. EDPR's share price remains above the offer price at €6.84/share.
According to equity analyst Helena Barbosa of Caixa BI, the offer failed to impress "some institutional investors, who stated publicly that the price was too low". Another London-based equity analyst told Windpower Monthly that "EDP felt no pressure to make a more generous offer because it already has control" of EDPR.
A beneficial aspect of the low uptake from EDP's perspective is that around EUR1.3 billion of capital raised from the sale of its Spanish gas-distribution business can now be used "to facilitate the deleveraging process", Barbosa said.
Given that the parent company had previously made clear, in its 2016-2020 business plan, that it intended to concentrate its business on renewables, including increasing both wind and solar capacity, these events will have little impact on EDPR, the analysts thought.
The low liquidity of EDPR's share as a separate entity on the Lisbon stock market, which was one of the elements the delisting was designed to address, "is a minor issue" for the company, Barbosa said.
EDP sold 22% of the stock in EDPR in 2008 at €8/share. At the time, there was "a bubble in wind, the company was paying for ten years' value accretion and needed minority shareholders" to raise capital, the London-based analyst said. "Now they're much better capitalised, so there is no longer a need for minority shareholders," he added.
Rumoured negotiations to merge EDP with Spanish energy company Gas Natural have been denied by both companies. According to Barbosa, such a deal is unlikely because it would require the Chinese shareholders in EDP "to be willing to see their shareholding diluted" in the resulting merged company.
EDPR's half-year results, published at the end of July, reported an 11% increase in both revenues and Ebitda year on year, to €988 million and €719 million respectively. Net profits jumped by 128% to €134 million.
The higher revenues were generated by increased production in North America, where sales rose by 25% to €340 million, and in Brazil, where sales were up 52% to €18.5 million.