Inmobiliaria Colonial SA (COL) jumped in Madrid trading as Grupo Villar Mir, an investor with interests ranging from fertilizers to construction, considers acquiring a stake in the debt-laden Spanish property company.
Inmobiliaria Colonial climbed 9.1 percent to 1.01 euros, paring the stock’s decline this year to 38 percent and boosting the Barcelona-based company’s market value to 228 million euros ($295 million). It was the third-biggest gainer in the 112-company Madrid Stock Exchange General Index (MADX) today.
Villar Mir, the closely held owner of a shareholding in builder Obrascon Huarte Lain SA (OHL), is weighing a purchase of as much as 29.99 percent of Colonial via a capital increase, a person familiar with the matter said, asking not to be identified because the deliberations are private. Juan-Miguel Villar Mir, chairman and owner of the Madrid-based holding company that bears his name, said this month he’s considering investing in Colonial, whose shareholders include Commerzbank AG (CBK), Credit Agricole SA (ACA) and Goldman Sachs Group Inc.
“It will all come down to price and I suspect he’ll ask for a big discount,” Francisco Salvador, a Madrid-based strategist at FGA/MG Valores, said by telephone. Villar Mir is known as a contrarian investor and has successfully restructured businesses in the past, Salvador said.
Colonial, whose assets include office properties in prime locations of Madrid, Barcelona and Paris, has struggled with mounting losses and debt from its expansion during the real estate boom in Spain.
In Spain, investors that acquire 30 percent or more of a company are required by law to make a full takeover bid. Villar Mir isn’t interested in buying individual assets owned by Colonial, the person said.
Representatives for Grupo Villar Mir and Colonial declined to comment on the acquisition plan.
As Spain grapples with record unemployment, spending on real estate has slumped. Prime rents in Madrid have fallen 41 percent since peaking in 2008, according to BNP Paribas. Investment in Spanish commercial properties fell 45 percent in 2012 to 1.8 billion euros, according to Deloitte LLP.
Colonial’s first-quarter net loss widened to 24 million euros from 13 million euros a year earlier. Net debt fell to 3.4 billion euros from 3.6 billion euros in the fourth quarter.
Villar Mir started building his group in 1987, steering it into real estate and construction before diversifying into areas such as fertilizers and electro-metallurgy.
OHL jumped 2.9 percent, bringing the shares’ gain this year to 35 percent, compared with a 7.7 increase by the 31-member Madrid Stock Exchange Basic Materials, Industry & Construction Index.