Anti-takeover shield, key for M&A in uncertain Spain

Spain’s listed companies are candy for investors. Overall, share prices are low. Furthermore, Spain is under a caretaker Government and there is plenty of political uncertainty on the future rulers of the country. Under these circumstances, Saudi Arabia’s STC – the national telecommunications company owned by the sovereign fund PIF with a 64% stake – has acquired 9.9% of Telefonica to become the main shareholder of Spain’s largest carrier.

In this turbulent moment, Spain has a tool that could serve to protect its strategic companies before a foreign bid: the so called anti-takeover shield, which was established by the left-wing Socialist Government during the pandemic to prevent acquisitions when stock prices were depressed. Telefónica is a technological partner of the Spanish Army and therefore manages sensitive security data – and constitutes a competitive advantage for the country due to its important presence in Europe and Latin America. “We will apply all the necessary mechanisms to defend Spain’s strategic interests,” said the acting first Vice-President and Finance Minister, Nadia Calviño, after learning about the acquisition.

At this moment, the landing of STC in Telefónica does not require government approval because by acquiring a stake of less than 10%, the deal avoids the activation of the anti-takeover shield. In short, it respects Spanish legislation, which the former government has been tightening in recent months.

However, uncertainty is high as this is not an isolated operation in Europe supported by petrodollars. Another Arab investor, Emirates Telecommunications Group Company, has already bought a 14% stake in another major telecoms group, Vodafone, benefiting from the significant fall in share prices.

Spanish tourism shows solid recovery this summer

Spain saw an unprecedented resurgence in the tourism industry this summer. Projections for 2023 suggest that Spain will receive up to 85 million tourists this year, which would mean an increase of around two million compared to 2019, the year before the outbreak of Covid.

This robust recovery after two years affected by pandemic restrictions has boosted employment, as one in four jobs in Spain this summer is related to the tourism industry, particularly the hospitality sector, which is the one generating most of the jobs. The return of international tourists, whose influx will surpass pre-pandemic records this year, according to experts, has had much to do with this.

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