From Predator to Prey: Spanish Recovery Draws Overseas Bidders
(Bloomberg) -- Spain Inc. is back in fashion.
Italy’s Atlantia SpA announced on Monday a 16.34 billion-euro ($17.9 billion) bid for Abertis Infraestructuras SA to create the world’s biggest toll-road operator, a deal that may be the largest takeover of a Spanish company in a decade. The offer is a sign of the growing attractiveness of the country’s assets as the economy, ravaged during the financial crisis, continues to heal.
The volume of mergers and acquisitions involving Spanish targets has increased 57 percent to about $63 billion in the last 12 months, according to data compiled by Bloomberg. If successful, Atlantia’s bid to buy Abertis would be the biggest since 2007 when Italy’s Enel SpA along with Spanish infrastructure firm Acciona SA bought power company Endesa SA in a landmark deal before the economy lapsed into a five-year slump at the end of 2008.
Atlantia’s offer is “a vote of confidence in Spain and shows how the country’s companies are now becoming anchored in the global economy,” said Mauro Guillen, a professor of management and international relations at the University of Pennsylvania’s Wharton School.
Interest from foreign investors has grown as Spain’s economy continues a recovery that has now extended for 14 consecutive quarters. The election of Prime Minister Mariano Rajoy of the pro-business People’s Party to a second term in office last year has also helped seal a period of political stability for the country.
Buyers and Sellers
The increasing confidence in Spain paved the way for three significant deals last year. Europe’s biggest publicly traded health-care provider Fresenius SE agreed to buy Spanish hospital group IDC Salud Holding SLU, also known as Quironsalud, for 5.76 billion euros.
Canada’s Global Infrastructure Partners bought a 20 percent stake in Spain’s gas supplier Gas Natural SDG SA for 3.8 billion euros, and Europe’s largest engineering company Siemens AG and Gamesa Corp. Tecnologica SA agreed to combine their wind-turbine manufacturing businesses.
That compares with previous years when some of Spain’s biggest publicly traded companies bought businesses abroad to reduce exposure to their home markets. In 2014 alone, Spanish companies spent $22 billion buying assets outside the country, mainly adding businesses in the Americas, according to the Bloomberg data.
To be sure, there may be clouds on the Spanish horizon.
As the leader of a minority government, Rajoy may struggle to achieve much more in terms of economic reforms. The opposition Socialists, whose goodwill on key legislation Rajoy needs to ensure parliament doesn’t become gridlocked, are also embarking on a leadership contest with party primaries due on May 21. A win for former leader Pedro Sanchez, a fierce critic of corruption scandals swirling around Rajoy’s People’s Party, would lead the Socialists into more open conflict with Rajoy and his government.
For now, Spain’s economic recovery is on course and set to attract more foreign investment as the government expects the economy will average 2.5 percent growth over the next four years.
“The combination of growth and value means Spain will stay in an investment sweet spot,” said Daniel Lacalle, chief investment officer at Tressis Gestion, a Madrid-based asset management firm.