UPDATE: Spain Gives Gas Natural Antitrust OK To Buy Fenosa

Spain's competition authority, CNC, has approved Gas Natural SDG SA's (GAS.MC) purchase of Union Fenosa SA (UNF.MC), a press official for the CNC said Thursday.

The CNC is asking Gas Natural to sell some assets. But the official early Thursday couldn't specify which ones.

Business Daily Cinco Dias earlier Thursday had said the CNC will allow Gas Natural to keep Fenosa's gas unit Union Fenosa Gas.

The CNC will give more detail in a press release and an official posting on its Web site later Thursday.

Italy's Eni SpA (E) owns 50% in Union Fenosa Gas and has preemptive rights to purchase the other half in case Fenosa is sold.

Gas Natural Chief Executive Rafael Villaseca Thursday said possible investments planned by the company don't include Union Fenosa Gas, and that it was up to Spanish authorities to decide whether Gas Natural is allowed to keep Fenosa's gas unit.

Markets are likely to react positively if the CNC lets Gas Natural keep Union Fenosa Gas, Banesto analyst Antonio Cruz said. Banesto has an overweight rating on Gas Natural with an EUR8.46 price target.

At 0921 GMT, Gas Natural's shares were down 0.2%% at EUR16.98 in a falling Madrid market.

Gas Natural last year announced its plan to buy 45.3% of Fenosa from leading shareholder Actividades de Construccion y Servicios SA (ACS.MC), or ACS. Gas Natural bought a first 9.9% from ACS in August, and needs the green light from the CNC before buying the remaining 35.4%.

Once Gas Natural has bought more than 30% of Fenosa, it needs to make a full takeover bid under Spanish law.

When Gas Natural announced its plan to buy Fenosa in July, Fenosa was valued at EUR16.75 billion.

To finance the acquisition, Gas Natural plans a EUR3.5 billion capital increase, which is scheduled for shareholder approval in an extraordinary meeting on March 10. Gas Natural has lined up 19 banks to grant it a EUR18.26 billion syndicated loan to finance the Fenosa purchase.

Authority Web site: www.cnccompetencia.es

-By Bernd Radowitz; Dow Jones Newswires; [phone]; [e-mail]