Investors in Spain are targeting a broad range of sectors including consumer, finance, energy, retail and real estate
International law firms are benefiting from an increase in
premium, cross-border M&A work involving Spanish conglomerates,
while domestic firms are picking up a healthy flow of smaller
deals, according to new data.
Uría Menéndez was the only Spanish practice to
feature in Mergermarket's ranking of the top 10 Iberian legal
advisers by M&A value for the period 1 January to 14 July, 2015
– the firm was in eighth place with deals worth €5.7
billion. Top spot went to Linklaters with a portfolio valued at
€22.2 billion with Freshfields Bruckhaus Deringer (€18.4
billion) second and Herbert Smith Freehills (€16.4 billion)
third. Other international firms to feature included Baker &
McKenzie, White & Case, Latham & Watkins and Allen &
Overy.
Alejandro Ortiz, a corporate partner at Linklaters, highlights
global deals as a driving force. "The high-value deals by
their nature tend to be cross-border, which is one reason why
international firms perform well," he says. "They have
offices around the world so are able to handle such large
matters."
However, Uría Menéndez partner Juan Martín
Perrotto, says: "The value figures have been slightly
distorted because the biggest deals included the likes of
Telefónica (which sold 02 to Hutchison Whampoa for €14
billion) and Banco de Sabadell (which bought TSB for €2.35
billion). These skew the overall value of the market but are also
effectively cross-border deals involving Spanish companies
abroad."
Spanish firms, instead, perform much stronger in the volume
tables, suggesting that a regular flow of small and mid-sized deals
is keeping practices busy. Cuatrecasas, Gonçalves Pereira
had the biggest deal portfolio, with 26 transactions. Uría
was second (21 deals), Garrigues fourth (15 deals) and
Gómez-Acebo & Pombo Abogados seventh (nine deals).
Linklaters was third (17 deals), while Deloitte Legal, Allen &
Overy, DLA Piper, PwC Legal and Baker & McKenzie also
featured.
Álvaro Sainz, head of corporate for EMEA at Herbert Smith
Freehills, says the fact that international firms are doing well in
the value tables and that Spanish firms are doing well by volume is
basically down to their different business models.
"International firms generally have fewer lawyers and they
therefore focus on higher value but a smaller number of
transactions, while with a much larger number of lawyers, Spanish
firms can handle a high volume of smaller value transactions,"
he adds.
Sainz remains optimistic, pointing out that the number of
transactions might have decreased but the value of deals has been
relatively steady, suggesting that the market is recovering with
the return of higher value transactions. "The market trend has
very clearly changed," he says. "Confidence has returned
to the economy and competitiveness has returned due to the measures
that Spain has taken, resulting in the recovery of asset
value." Sainz cites a number of opportunist transactions last
year, specifically transactions targeting the acquisition of assets
at bargain prices, taking advantage of companies' need for
liquidity.
Assets' true value
This trend has started to shift in 2015. The economic upturn
and, especially, improvements in the financial markets has meant
companies have not had to sell off their assets at any price. As a
result, transaction prices are beginning to approach the
assets' true value.
Ortiz expects that, despite some worries about the Spanish
elections and the situation in Greece, the market will grow after
the summer. "Many funds and other investors are coming into
Spain and are targeting a broad range of sectors rather than mainly
distressed assets as was the case during the crisis," he
explains. "There is interest in assets across consumer,
finance, energy, retail and even real estate sectors, both for
large and small deals." Alberto Alonso Ureba, head of Baker
& McKenzie´s corporate law and markets practice, adds:
"The accelerated process of divestment by Spanish companies
due to the economic crisis has given rise to M&A deals of all
sizes."
Perrotto predicts more mega-deals, especially big strategic deals,
and a return to pre-crisis levels of activity. "Infrastructure
and energy are areas in which investors are looking at prime
assets," he adds. "Indeed, a decade ago infrastructure
funds had about $2 billion of assets – now they hold around
$300 billion, they are now major players."
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