It seems fairly normal. The key point however  is that Gas Natural and Endesa are not at all normal companies. The combination of both is even less normal.

Behind this simple report there is a whole world underground. I will try to explain it short and easy .. so that you do notget bored.

In Spain there are a special types of Banks, they are called Cajas. For the customers, they are just a normal bank. But actually, they do not have stock-owners. They are similar to the sparkasse in Germany Migeru points out that they are not unlike the Building societies (there are some differences though) and they are the equivalent of the caisse d''épargne in France.

Las Cajas de Ahorro in Spain have a board of directors selected by a mix of politicians and local economic power-houses. These "Cajas" are strongly stablished in different parts of the country. In Madrid there is  Caja Madrid and in Barcelona "La Caixa" (among smaller ones). And here it comes the most interesting part, even when La Caixa can not be owned by anybody who is not an important member of the Barcelona society, it indeed can own other companies. Cajas can have the majority of other company stocks or constitute a hard core of stockholders   of a company ... they can even have the final say on the CEO.

Let us focus on La caixa... La Caixa controls four big companies. One for oil (Repsol.. with other people), another  for Highways with tolls (Abertis, alone), another for Natural gas (GN mostly alone) and one for Water control and treatment (Aguas de Barcelona).

A big company in every sector. But the only really international company is Repsol, and La caixa can not control it alone. Notice that there is no electric company and that La Caixa fully controls Gas Natural.

Let's move now to the big energy companies in Spain (mainly three: Iberdrola, Union Fenosa, and Endesa). They come from the selling and split of a former monopoly. The energetic monopoly was sold inthe 80's to the rich fat guys in Spain. Nowadays each company basically operates in a different part of the country having a local "de-facto" monopoly.

Controlling these companies from a single institution is difficult. They basically depend on banks and foreign investor. The government can indeed have an influence by pressing the spanish stock-holders, be their individuals (friends of the government) or local Banks (BBVA, B. Santander..) These companies can turn out to be controlled by a certain group of the civil society. Endesa, in particular, is one of the most reliable sources of money and power for the right-wing in Spain.

The left parties have been saying that the Endesa electric corporation and its president gave large donations to the PP (right-wing), though admitting there was no proof.  According to the PP, the PSOE government now) was trying to "create a smokescreen in order to cover up the Montilla scandal." (strong relation between La caixa and the present industry minister). Endesa president Manuel Pizarro denied that he had given money to the PP, and left the question in his lawyers' hands to never heard about it again.  

M. Pizarro was apointed with its own finger by former President Aznar (buddies you  know) after putting strong pressure on private banks

Endesa has been accused of spending great chunks of money with other US companies trying to spread doubts on the science of global warming in the US (Greenpeace allegations). Claiming the same thing in Spain can cause  you serious trouble so they just tried to influence foreign governments (or just support Aznar friends in the US). The main reason for this behavior is that Endesa HAS TO use coal. This is, the coal power stations that came from the Franco era were given to Endesa when the monopoly was split. He has no other option than use them.....

And here Gas Natural enters the picture. What about not using coal stations any more, or even adapt them to burn Natural Gas. What about, even, creating a power station that can burn both coal and gas?

Spain is the third world importer of gas in the world.. 50% from Algeria, the rest quite diversified from around the world. And almost all of it is imported by GN for their service to private users (families at home)  and some  power stations.
The most important fact however, is that Spain has rights over a huge quantity of gas around the world. It could run all the cars in Spain with gas...but there is still no cars going with gas...so it could (and will)  end up substituting coal. That is,if only GN would have those power stations... and now they got them...most of them..

Problem is... GN had not that much money to take over Endesa, basically 70% of the savings in Catalonia through La Caixa are not enough to guarantee such operation right now. But if GN can sell some of its infraestructure to a competing/ non-competing company like Iberdrola, which is based in the Basque Country,well...that would give GN the money it needs. But how could Iberdrola pay so much money .. well becasue the president of the biggest Bank in Spain (Santander), another power-house, wants to be fine with right and left wing governments and he decided to.... well, let's forget the details. Suffice to say that he made an operation that allows Iberdrola to have the money

And today the government gave the nod not only to the take over, more importantly, the possibility that GN can sell part of the infraestructure to Iberdrola. It also imposed other restrictions so that GN does not get all the power stations in some areas  so that other small-middle companies could eventually become important in the future (we have a center-left government after all.).

All in all the third world energy company is created in Barcelona, the second largest energy company in Spain strengths its position and it is also based outside Madrid.

You could guess how the economic elite took these facts in Madrid. They are really pissed-off. As Migeru properly notices:.

That was not all. They also launched an all-assault on La Caixa when the take over was announced some months ago. The  attacks on the government and on President Zapatero were also continuous. Zapatero had a very clear idea in mind: PSOE (its party) could guarantee his way into government for 12 more years if he blew the rigth wing out of some areas of Spain (Catalonia, Basque Country, and Andalucia). Transfering power out of right-wing hands in Madrid to other aras was... fuc----ly brilliant. Making friends within the economic elites of other areas of Spain is also smart.

And out of this, suddenly Europe has a huge player. A player that would produce enegy from coal or natural gas for the next 20 years (in the middle of the oil peak). It will be the equivalent of the nuclear power in france  but with another model. Spain will have 33 % of coal/gas generated electricity, 33% of wind/hydro (the bet of Iberdrola) and 33 % of  nuclear... a good mixture for  energy.. and controlled by no foreign investor; controlled by the saving of a huge number of middle and upper class savings...

I do not know if it will beat other models in Europe.. but I am dead sure they are going to try.

Other sources:

El Pais updates

I hope there will be updates because things are developing fast.. it seems that the right-wing is really pissed-off...more news soon for sure about their possible reactions

UPDATE I:

The figth against the EU comission was real... down to judges. It was dead serious. Here tere are links to the decission of the ENDESA vs the EU comission :

Ressolution in :

French

Spanish

UPDATE II

It seems the right-wing is up in arms. There are reports of Endesa going to the Spanish Supreme Court agaisnt the government. Other reports claim that PP (right-wing party) has vowed to undo any ruling if they ever reach power again. We will wait and see until they are confirmed.

UPDATE III

Multiple sources confirm that Iberdrola, the other great player, has issued an statement showing its support for the decision. The other great electric company Union Fenosa, normally not happy about this take over, has reacted surprsingly well to the decission making an U-Turn. It could very well be that the government has sweetened the take-over to make the position of Union Fenosa better. Union fenosa statement about the take-over government rquirements to implement the take-over:

Fast Translation: "It could be implemented in a way that contributes to the equilibrium of the system. An adjustment that the electric company (UF) considers unavoidable and urgent

UPDATE IV

Well, I think this is the last update. The list of reactions has been quite large in the last hours. The reactions are very important for Spain but I doubt they will have any effect/impact in Europe for the time being. Only if the new "big baby" is born, then Europe will heavily notice the consequences.

But there are a lot of people around here interested in Spain and the power struggle there, so I think I must complete the diary

First important news: Endesa is going to the Spanish Supreme Court against the government. According to La Vanguardia and El Pais there is no way back and the lawyers of Endesa are already working on it.

The Union Fenosa U-turn has been confirmed despite the fact that is controlled by ACS, the construction company owned by the R.Madrid football club president Florentino Perez and very close to PP. Everyone is stil wondering why the change.

On its turn, Gas Natural did not expect one of the conditions that the government has finally imposed. They will have to get rid of 1.5 million customers in Spain...I am still asking if they will go mainly to Union Fenosa.

And finally, the reaction of the president of the right-wing party PP is still missing. It seems that one of the spokespeople of PP spoke too fast about "dismantling the new monopoly" as soon as they get back to government. The last person to spoke (Acebes, ex-interior minister during 11-M) from PP said that if they are back to government they will "adopt the necessary steps to avoid situations of monopoly in the economy" that can hurt the citizens.

I think this will be all for now. We will have to come back to it probably since I see this merger happening and this company entering in the European markets big time....Time will tell. Meanwhile, a new giant is in the making.