Spain M&A Boosted by Growing Optimism

Spain M&A boosted by growing optimism

Spain M&A Boosted by Growing Optimism

Spain has been a hub of M&A activity over the last 12 months and the outlook for 2015 is rosy as the economy continues to improve. Renewed foreign investor interest in Spanish assets, combined with local companies’ expansion ambitions at home, have helped fuel an increase in acquisitions across a range of sectors.

Thanks to reforms to the labour market, many industrial companies have become more competitive and, consequently, a more attractive investment bet for savvy international predators. In 2014, the M&A business grew 54 percent year-on-year, according to research published last month. Top consultancy firms KPMG and PwC were flagged as the main movers and shakers in these deals.

KPMG brokered the world’s third-biggest discount supermarket group Dia’s purchase of grocery chain El Arbol, as well as Vodafone’s buy of Spanish cable operator Ono – one of the most important deals in the European telecommunications market. PwC advised several Spanish banks, including Santander and Kutxabank, on the sale of their property management businesses to US investment funds.

 

PRIME ASSETS NOW TEMPT INVESTORS

At the height of Spain’s economic and financial crisis, overseas hedge funds and private equity firms swooped on distressed property and industrial assets at bargain basement prices. However, with Spain’s GDP growth forecast to outpace that of its European peers in 2015, foreign investors are now setting their sights on corporate and private equity deals involving prime assets. Small and medium-sized companies (SMEs) with growth and export potential are on their radar.

International infrastructure funds are also eyeing Spain as signs that the construction sector – once a symbol of the country’s deep crisis – is slowly recovering, prompting expectations for new infrastructure projects – US billionaire Bill Gates bet a winner with his buy of a 6 percent stake in builder FCC towards the end of 2013!

 

INCREASED LIQUIDITY WILL BOOST M&A

Access to increased liquidity as the banks turn the credit tap back on will help larger Spanish firms take advantage of M&A opportunities this year. The financial sector is in good shape after a series of government-driven reforms and a 41 billion euro EU bailout to help boost capital.

Spain’s improving economic indicators will also allow its top firms to seek additional financing from international investors through cash calls or bond issues. Last month, Santander successfully raised 7.5 billion euros through a capital hike. It will use the cash to fund expansion at home and abroad. So the bank is back on the acquisition trail!

The government is also encouraging local companies to grow their business with fiscal incentives, including a reduction in corporate tax rates over the next two years. Foreign companies keen to expand to Spain will also benefit from this measure.

For information on investing in Spain, contact corporate law firm Argali Abogados.

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