It has been the case all too often in recent history that shareholders/management voting to reject bids has been a bad idea. However, at least in the case of EDP, the market cap is above the €10bn offer from China Three Gorges.
Nevertheless, with Elliott muscling into the situation as an activist investor, it may be expected that EDP will have to start making moves soon to justify being independent, and to extract the kind of shareholder value that may exist here if the current near €12bn price tag is to be justified.
Elliott’s proposal to raise €7.6bn from the sale of non-core assets would go a long way to do this, and the expectation must be that the process could be announced sooner rather than later.
Looking at the price action of EDP, the stock has been in a relatively erratic €2.90 – €3.60 range over the past year. But with the recent sub €3.10 bear trap, one would look to the next break of €3.30 leading to a more sustained move to the upside, and perhaps even a break to the upside.