Merlin, Blackstone & Colonial In Final Round For Testa

2 June 2015 – El Confidencial

The countdown has begun. The second week in June is the date marked in the calendar for the submission of definitive offers for Testa, the real estate company that Sacyr has put up for sale, following the difficulties it faced undertaking a capital increase on the stock exchange. Although the official message from the construction company is that the option of carrying out an IPO is still on the table, the reality is stubborn and paints a picture in which the figures that the group chaired by Manuel Manrique aspires to generate will be impossible to achieve in the market.

By contrast, the direct sale to real estate groups and investors has whetted the appetite of several industry giants, which have decided to go ahead with their bids. Specifically, Merlin Properties, Blackstone and Colonial make up the final short list of investors that must submit their definitive bids next week, according to sources close to the process, being coordinated by the investment bank Lazard.

Along the way several investors have dropped out of the running including Hispania, which barring a last minute surprise, has failed to meet the requirements necessary to move forward, and Eurosic, the French group, which has approached Colonial and Blackstone to try to design some kind of joint bid, but which seems to have fewer chances than its rivals, although it has not yet thrown in the towel.

These investors are, in turn, working with different route maps, given that whilst Blackstone is planning to submit a bid for 100% of the company, which means it will pay around €2,000 million, its rivals are working with the idea of initially purchasing a 30% stake, worth €500 million, and a testament to conditions aimed at ensuring an IPO in the future, if the circumstances allow, as well as acquiring all of the company through a merger by share exchange.

Nevertheless, these numbers need to fine-tuned, a process that the three interested parties are now undertaking…Even though Sacyr’s subsidiary is one of the largest owners of assets in Spain; its portfolio includes iconic buildings such as the Torre PwC, as well as other significant properties in Spain’s main cities; it is also still very weighed down by the difficulties it has experienced in recent years.

These include a loan linked to the construction company amounting to more than €900 million, which Sacyr was planning to cancel when it listed the subsidiary on the stock exchange, as well as several liabilities guaranteed by Testa amounting to €500 million. According to market sources, these figures explain why Sacyr decided to open the direct sale process, since during the initial rounds it thought that it would obtain just over €300 million, i.e. an amount well below the current asking price of €500 million.

Testa’s assets amount to almost €3,200 million, making it one of the largest asset companies in Spain. The bulk of its portfolio is centred on offices for rent, but it also includes hotels, homes, commercial, industrial, residential and car park assets.


In terms of the sale of the RE company, Sacyr’s objective is to reorganise its financial position, since for almost a decade it has been conditioned by its equity position in Repsol. In fact, if it ends up selling 100% of its subsidiary for cash, the aim of the construction company is to use the money to repay a €2,264 million loan linked to 9% that it still holds with the oil company, which would almost cancel it completely.

Original story: El Confidencial (by Ruth Ugalde)

Translation: Carmel Drake