When the Spanish government instituted reforms to the Takeover Code in 2003, following an unprecedented M&A boom in the property sector, few thought it would be the end of the matter.
The revised code was designed to protect small investors, and pundits saw it as just another step towards the Anglo-Saxon model.
Three years on and it appears that they were right. The government is seeking to overhaul the code once again, with a new code set to come into effect in January 2007. This seeks to simplify the complex web of takeover rules that often leaves companies, especially those from abroad, confused as to what exactly the law requires.
Cuatrecasas partner Fernando Torrente García de la Mata says: “The new regime will bring Spain in line with other EU countries.” But he cautions that the draft guidelines could still change.
Whatever form the final code takes, it will undoubtedly facilitate more hostile merger bids. While the UK has seen more than 200 hostile takeover bids in the past decade, Spain has had less than 10 – with four in the last year alone (Endesa, Telepizza, Metrovacesa and BAA).
While Ferrovial’s successful bid for BAA has won high praise for law firm Freshfields, Sacresa’s £1.5bn pursuit of Metrovacesa has seen a number of bids and counter-bids ultimately leading to both sides becoming immersed in regulatory difficulties and the start of legal proceedings. Linklaters and Clifford Chance, which are acting for the counter-bidders and Sacresa respectively, now face a long haul in the courts.
From January the new Takeover Code could smooth the way to more mega-deals. Some will be hostile, but all will be easier to put together.