The Spanish Government Expands The Anti-Take Over Bid Shield Iniciated Due To The Pandemic

Spanish Ministry of Economy, Nadia Calviño

The Government has approved the extension of the regulations on foreign investment. The aim is to make it more difficult for foreign investors, now including European ones, to take control of strategic Spanish companies which have seen their share price drop significantly due to Covid-19.

From now on, and on a temporary basis until the end of the first half of 2021, any purchase operation over 10% of the capital of a listed Spanish company considered strategic – or an investment over 500 million euros in the case of an unlisted one – by a foreign investor, European or not, must be authorized by the Council of Ministers. It reserves the right to veto the transaction.

The latest issue of the measure, which was already in force, is to extend to EU investors plus the UK, Switzerland and Norway, the restrictions approved in March for non-EU investors. According to Banca March’s analysts, “to some extent, the government is re-introducing the golden share mechanism, present in the past in some key companies in the national economy. “

The State historically maintained a mechanism called ‘golden share’ to prevent strategic Spanish firms from falling into the hands of non-EU companies at times of sharp declines in their stock price. However, this practice was abolished by previous governments at Brussels’ request, in line with the principle of reciprocity.

Furthermore, with the extension of the regulation, the strategic sectors in which administrative authorisation is required to carry out direct investment are clarified. These include technology, energy, tourism, air transport and finance, amongst others.

The Ibex 35’s worse performance compared to other European selective indices so far this year, has left some strategic companies within reach of a takeover bid. This is one of the factors that led the government to take its decision.