Gas Natural SDG SA
Gas Natural SDG SA — Endesa — Merger or Acquisition (April 2006)
25 slides from Gas Natural SDG SA's merger presentation, Apr 7, 2006
Slide 1: Joining energies together
(_ Jong energies together easNatiia
Slide 2: Agenda
Agenda 1. Strategic rationale for the transaction 2. Summary of the tender offer for Endesa 3. Benefits for consumers and the general interest 4. Considerations regarding the European electricity market
Slide 3: The main European energy groups have adopted a gas and power integration strategy
The main European energy groups (except the Spanish ones) have adopted a gas and power integration strategy Acquisition of Ruhrgas E.ON Suez RWE Enel Acquisition of Distrigas and Fluxis Acquisition of Transgas and DEA Acquisition of Camuzzi and Colombo Gas GDF Merger with Suez Dong Acquisition of El
Slide 4: A transforming transaction to accelerate profitable growth
Global leading integrated Spanish gas and electricity company, with strong energy management capabilities Complementary, high-quality assets in fast growing markets Client-focused multinational leader with over 30 million customer accounts A transforming transaction to accelerate profitable growth
Slide 5: Creation of a Spanish leader in the energy sector
No.1 No.1 No.3 No.4 Global utilities – ranking by customer connections (millions) ² Creation of a Spanish leader in the energy sector Electricity and gas in Spain ¹ Electricity and gas in LatAm Global customer connections ² Global LNG supply Notes: 1 By combined customer connections, after asset dis
Slide 6: An energy leader in high-growth markets
LatAm • Gas and electricity distribution and supply • Electricity generation Puerto Rico • Electricity generation • Regasification plant Source: Endesa 2005 Annual report and Gas Natural. After assets disposals Italy • Gas distribution and supply • Electricity generation Spain • Gas and electricity
Slide 7: An attractive Spanish project from a strategic, industrial and financial perspective
Combined management of clients and networks More flexible and competitive gas procurement More balanced and competitive generation portfolio Attractive business mix and investment profile Gas and electricity convergence Sizeable synergies An attractive Spanish project from a strategic, industrial an
Slide 8: Positive financial impact
Positive financial impact Notes: Company estimates based on IBES EPS projections of €1.87 (2006), €1.92 (2007), €2.32 (2008) and a long-term growth rate of 6.8% for Endesa. Based on IBES EPS projections of €1.61 (2006), €1.75 (2007), €2.12 (2008) and a long term growth rate of 5.0% After planned dis
Slide 9: Attractive dividend policy
Additionally, all future capital gains resulting from the sale of non- energy assets will be distributed as dividends Payout of 52-55% in 2008 DPS increase by a minimum of 15% per annum for the 2006-2009 period Attractive dividend policy The New Group will adopt an attractive dividend policy ¹ , con
Slide 10: Summary of the tender offer for Endesa
Summary of the tender offer for Endesa
Slide 11: Unique opportunity to participate in a Spanish integrated gas and electricity project
Free float 63.1% La Caixa 14.7% Repsol YPF 13.2% Caja Madrid 5.7% Other² 3.4% GAS NATURAL + Endesa shareholder structure after the offer ¹ Unique opportunity to participate in a Spanish integrated gas and electricity project Endesa shareholders 57% GAS NATURAL shareholders 43% Creation of a Spanish
Slide 12: All the regulatory and administrative hurdles have been passed
All the regulatory and administrative hurdles have been passed Spanish antitrust authorities Regulated activities (Function XIV) National Energy Commission The EC confirmed that the jurisdiction on competition matters belonged to Spain European antitrust authorities Golden Share Secretary General of
Slide 13: Despite the numerous obstacles set up by Endesa to date
Despite the numerous obstacles set up by Endesa to date Note: Summary, for illustrative purposes, of the main legal and administrative actions launched by Endesa
Slide 14: Endesa's Board decision to post the €1,000 million bond impacts both tender offers
Endesa’s Board of Directors decision to post the €1,000 million bond has an impact on both tender offers Posting the bond has an adverse impact on the shareholders of the companies involved, and particularly on the shareholders of Endesa and GAS NATURAL The objective is to stop, delay and eventually
Slide 15: Benefits for consumers and the general interest
Benefits for consumers and the general interest
Slide 16: A transaction with benefits for consumers and the general public
Strengthens Spain’s security of energy supply through a stronger position in the international markets Investment commitment that will allow the improvement of the quality of power supply to clients Improvement of the sector’s competition situation in Spain A transaction with benefits for consumers
Slide 17: Security of supply in Spain
LNG 66% GN 34% Madrid Córdoba Security of supply in Spain Gas procurement in Spain Source: CNE natural gas monthly statistical bulletin, February 2006 European markets supplied mainly through piped gas from Russia and the Northern Sea. Spanish market mainly supplied by LNG from the north of Africa a
Slide 18: Investments to improve quality of service
Investments to improve quality of service Expected investments by GAS NATURAL + Endesa in Spain (estimate 2006-2009) ~ 4,700 ~ 6,300 ~ > 11,000 Distribution Generation Reinvested distribution synergies ¹ Total Source: GAS NATURAL estimates Notes: Up to 70 million euro per year estimated for 2008 and
Slide 19: Increasing effective competition in the generation market
28% 12% 16% 21% - 23% 18% 22% Increasing effective competition in the generation market Source: REE data and Gas Natural estimates. Mainland installed capacity Range refers to potential asset disposals scenarios: 1,200MW CCGT and/or Hydro Includes Endesa, GAS NATURAL, Iberdrola, HidroCantábrico, Uni
Slide 20: Improving competition in the gas market
Improving competition in the gas market Natural gas distribution (customer connections) 1,2 New Group Disposals II (0.25 million) NaturCorp Disposals I (1.25 million) Source: CNE. Natural gas statistics monthly bulletin. February 2006 Notes: 1 Including distribution companies’ liberalised customers
Slide 21: Considerations regarding European electricity market
Considerations regarding European electricity market
Slide 22: The European electricity market is not a reality
Electricity interconnection capacity is insufficient Electricity prices are not homogenous The liberalisation of the different markets advances at different speeds There are multiple asymmetries among countries in terms of sector regulation, taxation, state ownership, etc. The European electricity m
Slide 23: Interconnection among European markets
Interconnection capacity between Spain and the rest of Europe is 3-4% of total electricity production in Spain Under construction/completed Under consideration No new construction Interconnection among European markets The European electricity market is not a reality yet Source: European Commission,
Slide 24: Competitive landscape in the European electricity market
Competitive landscape in the European electricity market Source: Eurostat, domestic tariffs as of 1 July 2005, excluding taxes Electricity tariffs in Europe
Slide 25: Markets with higher tariffs have lagged behind in the liberalisation process
Markets with higher tariffs have lagged behind in the liberalisation process Liberalisation (electricity supplier switching rate for households and SMEs) Source: European Commission “Towards an efficient internal energy market”, November 2005 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%