Equity fund claims CTG's EDP takeover bid 'too low'

A US-based investment fund has called on China Three Gorges (CTG) to end its attempted takeover of Portuguese energy firm EDP.

Investment fund Elliot Management claims CTG's offer for EDP is too low
Investment fund Elliot Management claims CTG's offer for EDP is too low

Elliott Management presented a strategy for EDP to escape "the current impasse" of CTG’s stalled public offer of acquisition for the Portuguese generator and suggested the Chinese company to "formally withdraw" its bid for control.

In May 2018, the Chinese state-owned electricity company announced a €3.26/share offer to acquire 100% or EDP, in which it is currently the largest shareholder with a 23.27% stake.

Elliott claimed the CTG bid was "too low" and "not in the best interest of shareholders" because it entailed the sale of EDP’s US, and possibly Portuguese, assets "as a reactive response to regulators’ demands".

The fund argued that EDP should rather deleverage, grow its core renewables business and divest from both its Brazilian subsidiary and its Iberian electricity distribution and thermal assets.

The EDP board responded with a statement to the Portuguese stock market regulator saying, "We appreciate Elliott’s contribution and will carefully consider their proposals."

Following the publication of the proposal, EDP’s share price jumped to its highest level since September 2018 reaching the €3.26/share of CTG’s offer price.

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