Yet again, minority investors feel the pain, on this occasion those in the bidding company. Gas Natural on Thursday announced an agreed purchase of the 45 per cent of Unión Fenosa owned by the construction group ACS. Following regulatory approval, it will also tender for the remaining shares. Having failed in recent years to bag two rival Spanish utilities, Iberdrola and Endesa, Gas Natural was punished on Thursday for paying over the odds, with a 5 per cent fall in its share price.

Under the deal backed by Gas Natural’s majority shareholders, Repsol and La Caixa bank, minorities must watch their company offer €18.33 a share – a 57 per cent premium to Fenosa’s share price the day before ACS said it was a seller. The price equates to an estimated 10 times enterprise value to 2009 earnings before interest, tax, depreciation and amortisation. That is more than Enel and Acciona paid for Endesa last year but it is not a ridiculous multiple in the context of the sector. The reality, however, is that the mooted synergy benefits fall quite some way short of justifying the €6bn difference between Fenosa’s undisturbed market capitalisation and that implied by the offer. Gas Natural estimates annual synergies in the region of €300m. Taxed and capitalised – plus €500m of capitalised tax synergies – that equates to only €2.9bn.