Blackstone, Merlin, Hispania & Eurosic Bid For Testa

11 May 2015 – Expansión

The US fund, the two Socimis and the French real estate company have all submitted bids for Sacyr’s subsidiary. The construction group is also considering other options, such as performing an IPO of 30% of Testa’s share capital.

Sacyr now has four proposals on the table for the purchase of its real estate subsidiary Testa. The Socimis Merlin Properties and Hispania, the US fund Blackstone and the French real estate company Eurosic have all submitted bids to acquire Sacyr’s subsidiary, which owns assets worth more than €3,100 million.

Sacyr engaged Lazard to organise a competitive process for the interested parties to bid for Testa. The deadline for proposals was Friday and in the end, four offers were received for the construction company chaired by Manuel Manrique.

Bids were invited for 30% of Testa, the stake that Sacyr had initially planned to place on the stock exchange (it currently controls 99.2% of the capital) as well as for the entire shareholding. In the end, Merlin, Hispania, Blackstone and Eurosic have all expressed interest in acquiring 100% of the real estate company, according to sources close to the process.


Of the four candidates, only Merlin Properties had already formally expressed its interest in Testa. Now, the Socimi, which completed a capital increase amounting to more than €613 million last Thursay, has increased its bid to include 100% of the company.

The real estate company Hispania Activos Inmobiliarios has joined Merlin, the largest Socimi by market capitalisation. Hispania is owned by George Soros and John Paulson, and channels the majority of its investments through its Socimi Hispania Real. It has now fixed its gaze on Testa after trying to acquire one of the country’s other real estate companies, Realia.

Hispania, which is still waiting for a response from CNMV to the counter offer made by Carlos Slim to its bid for Realia, will now propose a similar transaction for Testa, whereby taking advantage of its access to funds from international investors.

Another one of the candidates is the French real estate company Eurosic. Last year, the company purchased Realia and Colonial’s shares in SiiC de Paris, for a total of €868 million. Now, it is looking to expand its portfolio of assets by backing the Spanish market, where the macroeconomic forecasts and the real estate environment point to an imminent rise in rental prices. Eurosic is participating in the process along with a foreign institutional fund.

Blackstone, the largest investment firm in the world, is behind the fourth proposal. This US fund has been investing in the Spanish real estate sector since 2013, when it acquired 1,860 rental homes from the Municipal Company for Housing and Land (Empresa Municipal de Vivienda y Suelo or EMVS) in Madrid. Moreover, Blackstone is the owner of four office buildings in Madrid and Barcelona, leased to companies such as Citibank and HP, as well as several logistics centres distributed across various locations.

The sale of 100% of Testa is just one of four scenarios that Sacyr is contemplating. As well as the possible sale of 100% of the company, the construction firm chaired by Manuel Manrique is also exploring the possible entry of a strategic partner to work together with Testa to realise the original plan of placing up to 30% of the company’s share capital on the stock exchange through an initial public offering (IPO).

Furthermore, Sacyr is evaluating a transaction that would have a much greater strategic impact and would involve the merger of Testa with another large real estate group. To that end, the company has begun preliminary conversations with Colonial to create the largest company in the sector in Spain and one of the largest in Europe.

On Saturday, Colonial said that “it would evaluate any invitation to participate in the eventual sale of Testa”. However, the group said that it is not “currently” studying any integration with Sacyr’s subsidiary.

In February, the construction company approved an “accordion operation”, where Testa regularised its finances with its parent company, subject to a capital increase of €500 million, which would allow the real estate company to strengthen its balance sheet. It is during this phase that the negotiations with Colonial would be addressed, according to sources close to the process.

Original story: Expansión (by Rocío Ruiz)

Translation: Carmel Drake