Emirates TAQA breaks off talks with Criteria Caixa over Naturgy takeover bid

As part of these contacts, which have been advanced, CriteriaCaixa will retain the management of Naturgy as one of its main shareholders. But demands from the two funds that own 40% of the energy company (CVC and GIP) regarding the capital that should have been allocated to them led to the breakdown of TAQA negotiations.

The government was going to let the Emirates keep the aforementioned 40%; and since, when it exceeds 30%, the law requires that a takeover bid be submitted at 100%, the Criteria were going to take over the excess over the 40% that was present in the bid. Hence the launch of the joint takeover bid and the plan for a subsequent capital increase to ensure liquidity of value and not leave Ibex.

I will look for other partners

Despite the failure of the negotiations, which the CNMV reported on Monday, CriteriaCaixa said it will continue to explore alternatives that “will make it possible to secure the Naturgy industrial project and accelerate its growth through options that provide stability to the company’s shareholders and that allow CriteriaCaixa to maintain its position as the company’s leading Spanish partner .

In mid-April, the Abu Dhabi firm confirmed it was in talks with CriteriaCaixa to become Naturgy’s first shareholder. He would do this if he acquired 40% of the Spanish gas company, which CVC and GIP funds (the latter owned by BlackRock) currently own and are ready to sell. In this way, the Arab company, together with Criteria, will control the future of the energy company led by Francisco Reines.

As in previous cases, the government defended its role in conditioning the operation on “regulatory instruments” that allow this, as recalled yesterday by Economy Minister Carlos Bodi, who noted that Spanish laws provide the “ideal” dose to achieve “a balance between protecting our companies, our strategic interests and attracting foreign direct investment.” That is, the government could condition the landing of TAQA in Naturgy, limiting its consequences, as happened with the merger of MásMóvil and Orange; or directly – as far as the anti-takeover shield allows – to enter the capital of the gas company in order to act as a counterweight, as is happening in Telefónica against the arrival of the Saudis from STC.

After several days of rumors, TAQA sent the relevant fact to the National Securities Market Commission (CNMV), in which it confirmed its intentions, although it clarified that “there is still no agreement reached” on what it calls “a possible cooperation agreement in regarding Naturgy. If negotiations succeed, the Arab firm expects it will have to make a takeover bid for Naturgy, as legislation requires this to be done when any transaction exceeds 30% of the capital. In the case of a joint acquisition of CVC and GIP, this would mean a purchase of more than 40%, so the liability would be activated.

Although the landing of the Arab firm will be brokered by Criteria Caixa, and the government appreciates Spain’s “important international attractiveness for investors”, the executive has already expressed concern about the fact that a company like Naturgy – with major gas assets in the country and key agreements with Algeria – may end up under foreign control.

CriteriaCaixa acknowledged negotiations to reorganize Naturgy’s capital with the arrival of a new investment partner to ensure control and a “strategic” role for the gas company. Industrial holding La Caixa and the largest shareholder with a 26.7% share admitted that it is “in contact with some of the main shareholders and is interested in reaching a potential partnership agreement with Criteria.”

La Caixa’s role was central to the operation. The firm has become a guarantee of stability not only for Naturgy, but also for other companies in which it also participates, such as Telefónica.