State Corporations, Mergers and Politics

Yesterday's big business story was the rumoured takeover bid by Gas Natural for Endesa to create a Spanish and European energy giant.
A quick glance at the television news reports this morning pitched this as not only a business operation but also a political move by the Catalan savings bank, la Caixa, which is the leading shareholder in Gas Natural and a major shareholder in Repsol (which also holds shares in Gas Natural).
The socialist government is playing down any question of political interests, but naturally the centralist opposition party has hit the alarm bell.
First of all the electricity, gas and petrol industries in Spain would be best described as oligopolies. Inevitably the Government plays a role in setting prices (gas sector) or limiting price increases (electricity) or setting taxes (petrol). That said, both companies are publically listed companies ... so the decision of whether or not to except the takeover bid is an issue for shareholders, not the Government.
There may be legitimate concerns about a lessening of competition, but there is an Energy Commission that is responsible to monitor such questions and the takeover would be subject to clearance on issues of competition. If the mechanisms exist, let them work without political involvement.

And what if the bid is politically motivated? La Caixa is a Barcelona based savings bank - the third largest banking institution in Spain after the giants, BBVA and Santander. Caja Madrid - the leading shareholder of Endesa is a large Madrid based savings bank. Now if the Caja Madrid was smart it might just take the premium being offered in the takeover bid and find some other healthy businesses to invest in. Who really cares whether the head office of the resulting merged company (should the operation succeed) is in Barcelona instead of Madrid - apart from the politicians? The employees faced with moving might opt to take generous severance pay or decide that living on the Mediterranean isn't such a bad alternative.