The Inconvenient Limits to European Unity & Integration


by Don Quijones, Wolf Street:

“With Friends Like These…” Spain Tries to Scupper Italian Takeover of “Strategic” Company

The race is on in Spain to stop Atlantia SpA, an Italian infrastructure group majority owned by the Benetton family, from buying Barcelona-based toll-road operator Abertis Infraestructuras SA. Atlantia SpA made a €16.3-billion ($19 billion) bid for Abertis back in May. Thanks to the fact Atlantia can borrow money at an absurdly low rate (grazie mille, Signor Draghi), most of its bid is in cash.

Spain’s government has taken a keen interest in proceedings. “It doesn’t please us at all,” said senior government sources in May. The Rajoy government claims that the motorways controlled by Abertis, both in Spain and overseas, as well as its majority stake in Hispasat, the world’s ninth largest satellite operator, represent national strategic assets.

The biggest concern appears to be over the prospect of decisions pertaining to Abertis’ assets being made in another European capital, though according to sources cited by Expansión, the real reason is that the Spanish government “doesn’t want Abertis in Italian hands — it’s as simple as that.”

Spain’s Ministries of Development and Energy have even urged Spain’s market regulator, the CNMV, to block Atlantia’s takeover bid on the grounds that the Italian company did not ask for the government’s prior approval before tabling the bid. It’s a curious pretext given that the Chinese company Cosco did not request the Spanish government’s prior blessing before acquiring Noatum, the largest maritime terminals operator in Spain, which surely also qualifies as a key national strategic asset. Nor did the US private equity fund that owned Noatum before Cosco.

The delay in the Abertis buyout is taking its toll. Big global funds, some of which have already backed their respective horses with big money, are beginning to fret that the operation could end up getting bogged down in legal battles. “There is concern because the feeling is that a takeover bid of this size will not withstand two or three years of legal challenges,” one of the fund managers told Expansión.

It’s not the first time this year that an Italian company’s takeover bid for a European rival has been hampered by government intervention. In July France’s newly elected President Emmanuel Macron temporarily nationalizedFrance’s biggest shipyards to frustrate an Italian takeover, ripping up a prior agreement in a protectionist move that infuriated Rome.

The Macron government blocked the sale of STX France to the Italian group Fincantieri in order to “defend the strategic interests of France”, using a ‘pre-emption’ right to buy all shares. In September a deal was finally struck that gave Italy’s Fincantieri (FCT.MI) effective control over French shipbuilding firm STX France but only under shared ownership and strict conditions.

Nonetheless, the diplomatic damage was already done, and it’s intensified feelings that Italian companies do not enjoy the same cross-border investment opportunities as their French or Germany counterparts.

Over the last five years, French companies have engaged in 177 Italian takeovers, for a total value of $41.8 billion. That’s six times Italy’s total corporate purchases in France over the same period. As the Italian author Thomas Fazi points out, this uneven treatment of cross-border corporate buyouts is not just causing a lot of lost love between European capitals; it’s leading to an increased “centralization” of European capital as German and French firms take over a huge number of businesses (or stakes of them) in periphery countries.

And now Spain’s government wants to take a leaf out of the same book.

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