Four months have passed since the Australian fund IFM launched the partial bid on Naturgy on 6 February. The operation must have the approval of the Spanish Government, which at the beginning of the pandemic crisis decreed that any acquisition operation of more than 10% of a Spanish company considered strategic by non-EU firms should pass through the filter of the Executive. The term for this is six months. It was expected that, given the magnitude of the operation, the Executive would shorten the terms; but between the distribution of European funds, two electoral periods (in Catalonia and Madrid), some legal issues that affect people involved in the shareholding and the recent decision of Criteria (one of the reference shareholders) to increase its participation instead of selling, among other things, two thirds of the term has been consumed.
The authorization must be made by the Council of Ministers after a report prepared by the Secretary of State for Trade, although it will be presented by the second vice president, Nadia calviño, after the holder of the bouquet, Reyes Maroto, decided to inhibit by working her husband at Naturgy. For now, those responsible for evaluating the operation have accumulated enough documents to raise the final proposal to the ministers and they have elements to clear up the doubts that had been presented at the first exchange rate. When the takeover bid was presented, there was disparity of opinions in the governmental environment, focused on the conditions that should be required for its approval.
So everything is waiting for Vice President Calviño to submit it for approval. The Australian fund, whose vice president of infrastructure is the Valencian Jaime SilesHope it’s sooner rather than later. This young Civil Engineer, who has spent these months visiting ministers and other Naturgy shareholders, has guaranteed the Spanish nature of the company and its listing in Spain, issues that worried the Executive.
Likewise, it has underlined its vocation of permanence and that its objective is that it be managed well. For this, it is willing to spend up to 5,000 million for almost 23% of the capital, although the success of the takeover bid is subject to at least 17% attending. In any case, any percentage within that range would entitle you to seat two representatives on the board of directors.
Currently, according to market sources, 68% of Naturgy’s capital is in foreign hands, mainly investment funds, which entered en masse after the sale of Repsol’s package. The oil company formed the hard core with La Caixa, which has its stake channeled through Criteria. Precisely, the holding company that presides Isidro Fainé decided to increase its stake from 24.8% to 29.8%, leaving it at the limit so as not to be forced to launch another takeover bid. This implies disbursing more than 1,000 million, although at the moment the purchase barely exceeds 25%.
The increased presence of Criteria makes the operation morbid. Until he announced this decision, he had kept the question of whether he would sell or not, as the GIP and CVC funds did at the time. For this reason, the position to buy confirms the will to continue as the reference Spanish shareholder and defend its interests, ensuring liquidity to all its shareholders. CriteriaCaixa argued that the decision “is consistent with the efficient and prudent management of its investment portfolio”, focused on companies that give it a stable and long-term flow of dividends that allow it to guarantee the La Caixa Foundation’s Welfare Projects.
Although Criteria has not ruled on whether it supports the takeover bid, the decision to increase its presence allows IFM to argue that its Spanish commitments are reinforced and support an industrial plan of the company by giving it enough time for its execution and prioritizing the productive investment; maintain the security of energy supply to Spain and avoid sales of Naturgy businesses without ensuring their reinvestment.
Increasing Criteria to 30% would reduce the percentage of shares for sale to around 25%, since the GIP funds, with 20.64%, and CVC, in alliance with the March group, with 20.72% , they had agreed not to attend and Sonatrach (Algerian state company) is not going to get rid of the 4.1%. When going from 25%, Criteria could demand one more director (go from two to three), but it would break the current balance in the council of the energy company that it presides over. Francisco Reynés, which by the way has not yet ruled on the takeover bid.