The Cabinet is preparing to extend the anti-takeover shield that it put in place in 2020, at the height of the pandemic, to protect companies in key sectors from foreign bids, according to government sources. The measure, which gives the government the power to veto the entry of foreign capital into these sectors, was due to expire on 31 December this year and is being extended until 31 December 2024. It also increases its firepower by clarifying that asset sales, very frequent operations in the energy and infrastructure sectors, will also be covered by this shield.
The so-called “anti-takeover shield” is in fact being developed in two Royal Decrees. The first to come into force, in March 2020, has permanent effect and allows investors from outside the EU who wish to acquire more than 10% of a strategic company for more than 500 million euros to be vetoed. Months later, by means of a second regulation, the government extended the coverage to prevent non-EU investors from circumventing the system by creating companies in EU countries, and made the shield also affect investors from EU countries. It maintained the rest of the conditions, but limited its scope to listed companies only and made it temporary.
This second rule was originally set to expire at the end of 2020, and after two extensions by the Executive (the last in November last year) it was due to expire in three weeks’ time. The third extension that the government is finalising will be longer than the previous two, of two years. The protection until the end of 2024 avoids, if it were to be extended for just one year as has been the norm, that the end of the regulation would coincide with the general elections. In addition, the government has taken the opportunity to clarify the scope of application. This is extended to the purchase of assets or branches of business, even if they do not involve control of the company, always within sectors considered strategic.
