The Battle for Endesa

I. Point of View
Wulf H. Bernotat, CEO of E.ON

II. Statement of the Problem

How will E.ON acquire control and ownership over Endesa?

III. Objectives
 To identify specific modes in acquiring control and ownership.
 To identify option that is suitable and favorable for the acquirer.

IV. Areas (Factors) of Consideration

 Competitors
 Amount of consideration to be tendered in securing ownership
 Company’s funding resources to finance the bidding
 Statutory requirements of Spanish government

V. Alternative Courses of Action

1. Increase the bid over other bidders.

Advantages: Disadvantages:
 Allows the company to  Failure to cover costs is likely
control the competition by to happen and as a result,
preventing potential there is a risk of losing from
competitors to step up. With margins.
this, you have total control  Sustainability on quality and
over your positioning. work on adding value to both
 No complex computations are customers and the product is
required. to be static.
 2. Finance rehabilitation in a form of merger.

Advantages: Disadvantages:
 Goodwill is increased.  The new company can gain a
 Combined forces to face monopoly thereby increasing its
competition. products and services.
 Increased financial resources  Creates gap of communication
and market share. that could affect employees’
 More growth and expansion performance as a result of
differing cultures.
 A company may opt to eliminate
underperforming assets that
results to employees losing their
jobs.

3. Financial rehabilitation in a form of consolidation.

Advantages: Disadvantages:
 Established and uniformed  The goodwill that these
operation procedures. companies would have created
 Elimination of redundancy. is lost when they lose their
 Lowered overhead separate existence.
expenditures.  Various legal formalities have
 Saving resources, money and to be observed and it is both
to reinvest funds. time consuming and expensive
to form.
 Difficult to form as the consent
a large majority of shareholders
of the companies has to be
obtained for forming
consolidation.

VI. Recommendation
 After thorough analysis of the foregoing alternative courses of action of the
case study, the case analyst recommends financial rehabilitation in a
form of merger.

VII. Plan of Action

1. Deal with the statutory requirements of the Spanish government
regarding acquisition of control and ownership.
2. Involvement and Engagement with the company to be acquired.
3. Planning the transaction.
4. Analysis of the company.
5. Drafting of Contracts and other transaction documents.
6. Finance for the operation.