6 July 2015 – Expansión
Although it may seem contradictory, Realia’s negative assessment of Carlos Slim‘s offer, announced by the real estate company’s Board of Directors yesterday, may be beneficial for the interests of the Mexican investor. If the minority shareholders (who hold a 38% stake) follow the Board’s recommendations, then they will not accept the takeover bid and that will allow Slim to reduce his offer and, at the same time, avoid one of the clauses that would activate the early repayment of some of Realia’s loans, amounting to €790 million.
Through Carso, Slim already holds effective control over the real estate company through his direct stake of 24.9% (he purchased Bankia’s stake for €44.5 million) and his indirect stake of 37% held through FCC (which has announced that it will not participate in the takeover bid), where he is the majority shareholder with a 25.6% stake. As a result, he exerts control over Realia, with a stake of almost 62%.
Carlos Slim launched a voluntary offer for 100% of the real estate company at the same price as he acquired the shares from Bankia (€0.58 per share), which exceeds the offer submitted by Hispania (€0.49). Both rival bids have now entered a competitive process, which the CNMV will settle within a period of 30 days.
Although Realia’s Board described the offer as “unreasonable”, it does appreciate certain features of Slim’s takeover bid. The offer from the Latin American tycoon falls 19% below the real estate company’s market price (€0.69), but it is 18% higher than Hispania’s bid. Moreover, Realia’s Board (the Mexican’s representative, Gerardo Kuri, did not participate in the deliberations) appreciates: the fact that the bid amount would be paid in cash; that the bidder is “a company with extensive experience in the real estate sector; and that the bidder would bring stability to the shareholder structure of the company”, which has promised to restore dividend payments as soon as possible and ensure the continuity of the company on the stock exchange.
Slim has been working on the company financing side of the Realia transaction for a long time. Realia’s main creditors are Fortress, King Street and Goldman Sachs. The funds, which together loaned Realia €790 million of its total debt of €1,000 million, signed an exclusivity agreement with Hispania. They could declare the early repayment of the liability, with just five days notice, if Slim’s shareholding were to exceed 30% and there was a change in Realia’s controlling shareholder.
Slim and Hispania still have time to improve their offers, up to five working days before the end of the period for offers to be accepted, i.e. around 17 July or 20 July. If they do not increase their bids, they must submit an envelope with their best offer to the CNMV. If Hispania’s offer is worse but the difference between its offer and Slim’s is less than 2%, then the Socimi in which George Soros holds a stake will have the option to match the offer made by its competitor.
Meanwhile, if the Mexican investor exceeds the number of shares held by FCC, it will have to launch a mandatory takeover for 100% of the company. And not at €0.58 per share, but at the fair price set by the CNMV.
Realia closed trading on Friday at €0.69 per share, up 0.7%.
Original story: Expansión (by C. Morán)
Translation: Carmel Drake