Spanish Defenders

Real Madrid's Boss Has Protectionism On His Side

Italy's Benetton family may have to pay up to win Spain's Abertis.
Photographer: Angel Martinez/Real Madrid via Getty Images
At Closing, February 23rd
19.56 EUR

One of Europe's biggest running takeovers is at risk of becoming better known as a victory for protectionism. Spain is stepping up efforts to prevent toll-road operator Abertis Infraestructuras SA being bought by Atlantia Spa, the Italian peer backed by the Benetton family, Bloomberg News reported on Tuesday. Even if Madrid doesn't succeed in this goal, it may deter future foreign bids.

Atlantia made a cash and shares offer for Abertis in May, worth 16.8 billion euros ($21 billion) for the equity based on its current share price. In October, a Spanish-flavored alternative emerged after Florentino Perez, president of the Real Madrid soccer club, assembled an offer worth about 18.6 billion euros.

Neither tilt is purely Italian or purely Spanish. The Perez bid is being led by Hochtief AG, a Frankfurt-listed construction group controlled by Actividades de Construccion y Servicios SA, the Spanish building company that Perez heads.

Outside Lane

Competing bids for Abertis from Atlantia and Hochtief have put the shares into overdrive

Source: Bloomberg

Hochtief would issue shares diluting ACS to a non-controlling stake. Atlantia is happy to keep a Spanish listing for Abertis, whereas Hochtief wants to de-list the company eventually.

There's always been a suspicion that the battle would be settled by politics rather than free markets. But while Madrid might prefer Perez, it can't gum up the M&A process without putting the same obstacles in Hochtief's way.

It has a get-around, though. Instead of forcing Atlantia off the pitch, Madrid is trying to persuade Abertis's biggest shareholder, Criteria Caixa SAU, to back the Perez side. Criteria, owner of a 22 percent stake, supported the initial Atlantia bid and astutely hasn't commented since.

Criteria's support looks more valuable to Perez than to the Benettons. The Hochtief offer depends on Abertis shareholders taking a big chunk of the bidder's shares. If Criteria subscribed for that block, Abertis's other investors could take cash.

But it's also theoretically possible for bidders to win without Criteria's support. Each side seeks only 50 percent of Abertis and 1 share to secure control. This is a battle for half the register.

Clearly it will be harder for Atlantia to win without Criteria on-side. It has signaled that it's preparing a counterbid. The Benettons may have hoped that the attractiveness of Atlantia stock meant it would not have to revise the price much higher -- or even as high -- as Perez's pitch. Now Altantia may have to put clear blue water between the offers, to embarrass Criteria into maintaining its support.

So even if Spain can't block the Benettons, any intervention will probably have made a deal more expensive for the Italian bidder. Future inbound M&A will be harder. That itself would be a sorry victory for protectionism.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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