Advisor(s)
Abstract(s)
When I decided to do a thesis focused on Energy Mergers and Acquisitions, EDP’s Privatization
had just been launched and E.ON was one of the potential bidders.
Soon after E.ON joined the pool of bidders, discussion emerged about E.ON’s motivations for
the deal. Was E.ON interested in the deal for the value creation potential of acquiring EDP or
was it being pressed by Berlin to participate in the bid and help show worldwide investors that
the Portuguese Privatization Program was credible and contained attractive investing
opportunities?
Another question that arose was if E.ON would be willing to pay a fair price for EDP or if they
were just looking to the deal as good bargain from a seller (Portuguese State) in need.
This thesis intends to help answering these two questions.
After revising valuation and M&A literature, I focused on analyzing the energy sector and both
companies’ profiles. I concluded that there was, in fact, perfect economic reasoning for E.ON
bidding for EDP.
EDP acquisition would allow E.ON to accomplish two major strategic goals: increase the
foothold in renewables and expand its presence in fast growing emerging markets.
When I finished covering the first question, E.ON had already made the bid in late 2011. This
allowed analyzing a posteriori the bid and concluding that the bid price offered by E.ON was
reasonably below the fair price they could have paid.
Ultimately, E.ON lost the bid to China Three Gorges which proposed a higher price and more
favorable payment terms. E.ON lost a good opportunity to add growth and diversification to its
business portfolio.