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Spain Plans to Shield Repsol, Iberdrola From Hostile Takeovers

June 06, 2012

Spain began moves to tighten takeover laws that could protect its biggest energy companies Repsol SA and Iberdrola SA (IBE) from hostile bids.

The Senate today will debate two amendments to its company and stock market laws proposed by the ruling People’s Party that will establish a minimum price for distressed targets and give executives more power to control major shareholders.

The government is erecting barriers around companies after the benchmark Ibex 35 index slumped 29 percent in the first five months, its worst start to a year since at least 1987, as investors dumped Spanish assets amid concerns the government will need a bailout. The combined market value of Repsol and Iberdrola is about 35 billion euros ($45 billion).

Legislators in the upper chamber will consider forcing bidders to file an independent report that establishes a minimum valuation when they make an offer for companies that suffered an expropriation, according to a draft of the law. Repsol, Spain’s biggest oil company, has lost about 46 percent this year after its YPF SA (YPFD) unit was seized by Argentina.

The report would consider the book value and break-up value of the company as well as the share price over the past 12 months. The law would also apply where there are signs the target’s stock price has been manipulated or where the company has been affected by a natural disaster.

Repsol spokesman Kristian Rix declined to comment. An Iberdrola spokesman also declined to comment.

The measures under discussion in the Senate, where Rajoy’s PP has a majority, will also need to be approved by the lower chamber, which takes precedence in disputes. A spokeswoman for the congress said officials haven’t decided when the legislation might be presented to the other chamber.

Voting Limits

Lawmakers today were also set to debate a measure allowing companies to fix voting limits on large shareholders, according to a draft of the law. The move would reverse a 2010 law introduced by former premier Jose Luis Rodriguez Zapatero.

Iberdrola, Spain’s biggest power company, has fought legal battles over voting rights with its biggest shareholder, the builder Actividades de Construccion y Servicios SA. ACS, which controls 15 percent of Iberdrola’s stock and has tried to gain a seat on the company’s board.

To contact the reporter on this story: Ben Sills in Madrid at

To contact the editor responsible for this story: Reed Landberg at

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