Suez and la Caixa move to secure control of Agbar

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Agbar’s main shareholders are looking to eliminate the risk of a hostile takeover bid by seizing control of the company. It seems the deal is something of a fait accompli.

Suez and la Caixa, owners of 49.7% of Catalan-based Agbar, announced on 10 April their intention to launch a public tender offer for the remainder of Agbar’s outstanding share capital.

The move follows an “irrevocable agreement” with minority shareholder Torreal SA to buy its 6.656% stake, which effectively secures a controlling position for the two major shareholders even before the tender gets underway.

The objective of Suez and la Caixa “is to acquire a position of control and stability” in the company, according to the official notification sent by la Caixa to the Spanish stock market regulator CNMV. The price they are offering, an average of €27 per share, is just below where the company is currently trading on the Madrid stock exchange.

Under the terms of the tender offer, joint holding company HISUSA (Holding de Infraestructuras y Servicios Urbanos SA) will look to boost its holding from 47.87% to 65.20%, while the portion of Agbar stock in free f loat is planned to sink from around 38.6% at present to between 30% and 33%. The remaining sliver of Agbar’s share capital is planned to be split 51%/49% between Suez and la Caixa, respectively.

The move kills off recent market speculation that Suez was looking to get rid of its stake in Agbar to facilitate its long-drawn-out merger with Gaz de France. In a statement, Suez said, “This transaction fits into the Suez Group’s business strategy based on a joint development of its core businesses, Energy and Environment, and illustrates its strong commitment to growth on the Spanish market with its long-standing partner.”

The statement also pointed to the recent “signing of a contract by Agbar and Degrémont for one of Europe’s largest desalination plants, in Barcelona, and the implementation of commercial synergies that bring new opportunities for Suez and Agbar at the international level” as evidence of Suez’s commitment to the future of the Catalan company.

Barcelona-based savings bank la Caixa has industrial investments worth €21.2 billion, the largest of any financial institution in Spain. Agbar is considered one of its most strategic holdings. and la Caixa’s current president, Ricardo Fornesa, headed Agbar for 27 years, including during its period of maximum expansion in Spain and in international markets.

“Having seen and drawn lessons from the battle for ownership of Saur” in France, the two companies have taken this opportunity to ensure control “in order to avoid any hostile takeover” according to DB Securities analyst Virginia Sanz. Agbar “would be an interesting acquisition for any private equity investor or for any construction company because it generates lots of cash,” she says. She also thinks that the consortium of Suez and la Caixa “will be content to ensure that it has the majority shareholding.” “Had they really wanted to ensure 100% (of the shareholding), they would have offered more than €27,” she told GWI.

Market sources, cited by the business daily Cinco Días, think Inditex boss Amancio Ortega is “likely” to accept the offer and sell his stake in Aguas de Barcelona, “unless a tempting counter-bid comes on the table”. Ortega owns 97.167% of holding company Pontegadea Inversiones, which itself holds a 5.01% stake in Agbar (see table above).