SHOULD Europeans worry that China Three Gorges (CTG), a state-owned firm, wants to buy EDP, a utility that is Portugal’s biggest company? It is three years since one local banker, Fernando Ulrich, called Portugal “a Chinese aircraft-carrier in Europe”—back then, Chinese buyers were already snapping up stakes in “strategic” local companies as quickly as the government could privatise them. CTG’s offer of €9.1bn ($10.8bn) for EDP, which was made on May 11th, will further unsettle those suspicious of China’s desire to snap up European assets.
The country is unusually welcoming to investors from the east. Its national airline, TAP Air Portugal, and Redes Energéticas Nacionais, the monopoly power transmitter, both have Chinese investors. CTG is already EDP’s largest owner, with a stake of 23%, after a €2.7bn investment in 2012. Now the Chinese want outright control.
To get that, CTG will probably have to raise its offer; EDP’s board rejected the price...Continue reading