Bankinter | The Spanish government extends its veto power against possible takeover bids by one year, until December 2022. So in Telefónica (TEF), as a company considered strategic, the government will have to authorise purchases by EU investors of more than 10% of the capital.
The ability to veto investments from outside the EU also remains in force indefinitely. These restrictions were imposed in April 2020 to prevent Spanish companies considered strategic (telecommunications, energy, banks) from being acquired by foreign firms following sharp falls in valuation.
Opinion of Bankinter’s analysis team:
Although so far the government has approved all the operations that have been proposed (such as the recent takeover bid for Naturgy), this requirement delays the acquisition process and represents a further obstacle in a takeover bid process.
In the case of Telefónica, it cools down the prospects of a possible corporate and sector consolidation deal at the European level, which had been encouraged after KKR’s bid for Telecom Italia.