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Veba denies hostile plans
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September 3, 1999: 8:56 a.m. ET
German utility rebufs report it went behind back of would-be partner Viag
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LONDON (CNNfn) - The two German utilities engaged in merger talks moved quickly Friday to quash a report that Veba was planning a hostile bid for its would-be partner Viag.
Veba denied that it had gone behind the back of the Munich-based company and had offered to buy the Bavarian state government's 25 percent stake, which comes with a veto on strategic decisions.
"We had talks with Viag on Wednesday that were very constructive, and more are planned," a Veba spokesman told CNNfn.com.
The assertion came after German business daily Handelsblatt reported that Veba had approached the Bavarian government about buying the stake to clear the way for a hostile bid.
The report added that the two companies disagreed about how to pursue the link-up.
Veba declined to say when further talks are planned, but the supervisory board of the Düsseldorf-based company is due to meet September 8 to discuss the merger.
The merger of two of the top three German utilities is expected to throw up a number of competition issues, but analysts believe the regulator has softened its stance on any tie-up.
Much of this has to do with the intense competition in the German electricity market, which has seen recent price cuts of more than 7 percent.
"If you had asked me a year ago what chance there was of a Veba-Viag merger proceeding, I would have said 20 to 30 percent. But because the competition is so intense I would now push that up to 75 to 80 percent," one analyst, who asked not to be identified, told CNNfn.com.
Separately, Veba and rival RWE confirmed they both had expressed an interest in taking a strategic stake in the nation's fourth-largest electricity generator, Energie Baden-Württemberg (EnBW).
The announcements came a day after Viag said it too was looking at investing in EnBW. The moves are unrelated to the Veba-Viag merger talks.
The state government of Baden-Württemberg is in the final stages of the partial privatization of EnBW and plans to sell around 25 percent to a strategic partner.
Veba stock was down 2.5 percent at 57.61 euros, while Viag rose 2.4 percent to 21.55 euros. 
-- from staff and wire reports
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