OPA NATURGY | The government agrees with the Emirates to protect mutual investments as part of the Naturgy takeover bid.
Spain and the United Arab Emirates will sign an agreement to promote and protect investments on a reciprocal basis. An agreement between the countries to facilitate mutual investment, which comes as Abu Dhabi prepares for its major entry as a major shareholder Naturgythe main gas company and the third largest electricity company in Spain, with a multi-million dollar corporate turnover.
On Tuesday the Council of Ministers authorized signing of an agreement between the Kingdom of Spain and the United Arab Emirates, the contents of which have already been agreed between both countries and which have also received the approval of the European Commission. The government has not disclosed details of the terms agreed with the Emirates, but official sources stress to EL PERIÓDICO DE ESPAÑA that the development of the bilateral pact has a long history and has nothing to do with Naturgy.
A bilateral agreement to promote mutual investment will be formalized in any case on the threshold of a major corporate movement involving both countries and both governments. Taqa Group, one of Abu Dhabi’s state-owned energy companies, is in talks with CVC and GIP funds to buy their stakes in Naturgy (a total of 41.3%), which would force it to bid for more than 100% of the group’s shares. , is currently worth 23,000 million euros after the stock market surged in recent days. And Taqa is also seeking an alliance with CriteriaCaixa, the investment arm of the LaCaixa Foundation and the Spanish energy company’s largest shareholder with a 26.7% stake, so that it remains a shareholder.
Government Permit Required
The government, which has publicly expressed some concerns about the Emirates’ entry into the capital of one of the country’s largest energy companies, is ready to support the operation in Abu Dhabi if it is agreed with Criteria Caixa, which will become the guarantor of the company’s Spanishness and national strategic interests, and if it considers a long-term industrial plan.
The operation for the United Arab Emirates to join Naturgy must be approved by the Spanish government, passing the filter of the so-called “anti-takeover shield”. The legislation was tightened last summer and requires foreign groups to obtain permission from the government to acquire shares exceeding 10% in companies in sectors considered strategic and which may be subject to certain conditions.
The government has already used an “anti-takeover shield” on Naturgy and imposed conditions on Australian fund IFM in 2021 to approve its partial takeover bid, through which it sought to take 23% of the capital (the operation failed, it only managed to buy about 10%, and then acquire small stakes on the market until it now controls 15% of the Spanish energy company).
IFM’s entry into the energy group was therefore conditional on supporting investment in strategic renewable energy projects in Spain, maintaining the company’s headquarters and business management in Spain, and a policy of prudence in the distribution of dividends in order to retain a significant part of the workforce in Spain or the debt ratio within investment grade. IFM was also ordered not to support the delisting of the company for three years.
Agreements on the Promotion and Reciprocal Protection of Investments (APPRI) These are treaties aimed at mutual protection of investments of companies from each country in the territory of another, with obligations and guarantees in both directions. The provisions contained generally reflect fair and equitable treatment based on international law, a prohibition of unjustified or discriminatory measures, and the establishment of mechanisms for resolving disagreements. Other APPRI agreements signed by Spain usually have a duration of ten years, which is extended for a period of two years unless one of the two states denounces the agreement.