SECTION 1: Market overview
1.1 What have been the key trends in the M&A market in
your jurisdiction over the past 12 months and what have been
the most active sectors?
Over the past 12 months the M&A market in Spain has
maintained the upward trend initiated in 2015. Multiple factors
have led to this but we would highlight the following as the
most relevant: a robust economic atmosphere; the consensus that
certain structural changes have been put in place to strengthen
the economy; and the designation of a prime minister during Q4
of 2016 after months of political instability.
The most active sectors in the M&A field during this
period have been real estate, technology and financial.
1.2 What M&A deal flow has your market experienced and
how does this compare to previous years?
According to Transactional Track Record (TTR), 2,023 M&A
transactions were reported during 2016, the value of 964 of
which has been disclosed, and which amounted to €111
billion. This represents a 1.86% and 10.16% increase
respectively in comparison with 2015.
1.3 Is your market driven by private or public M&A
transactions, or both? What are the dynamics between the
Private and public M&A transactions have both
contributed to a similar degree to the recovery of the M&A
market. On the negative side, we would highlight that the IPO
market has still not made a full recovery.
SECTION 2: M&A structures
2.1 Please review some recent relevant M&A transactions
in your market and outline any interesting aspects in their
structures and what they mean for the market.
Some of the most notable M&A transactions during 2016
have been the following:
- The acquisition of Grup Maritim TCB by APM
Terminals for €911 million.
- The share capital increase of Banco
Popular for €2.51 billion.
- The acquisition of 20% of Gas Natural
Fenosa by Global Infrastructure Partners for €3.8
- The acquisition of Urbaser by Firion
Investments for €1.28 billion.
The most relevant and encouraging upshot of these and other
relevant M&A transactions during 2016 is the realisation
that institutional investors are looking at the Spanish market
with renewed interest.
2.2 What have been the most significant trends or factors
impacting deal structures?
The Spanish M&A market has become more and more
sophisticated and complex during the last years. Not only new
actors, but also more complex deal structures and financing
formulas are driving the main transactions. This complexity
obliges investors to seek high-skilled, imaginative and
versatile advisors who will understand their needs and design
an ad-hoc, specific structure that will protect their
SECTION 3: Legislation and policy changes
3.1 Describe the key legislation and regulatory bodies that
govern M&A activity in your jurisdiction.
The key pieces of legislation that govern M&A
transactions in Spain are:
- Ley de Sociedades de Capital: the
Corporate Enterprises Act (CEA) 1/2010 of July 2;
- Ley de Modificaciones
Estructurales: the Corporate Restructuring Act (CRA)
3/2009 of April 3; and
- Ley del Impuesto sobre
Sociedades: the Corporate Income Tax Act (CITA) 4/2004
of March 5.
- Also, when strictly referring to public
- Ley del Mercado de Valores: the
Securities Market Act (SMA) 4/2015 of October 23; and
- Real Decreto sobre Régimen de
las Ofertas Públicas de Adquisición de
Valores: the Royal Decree on the Public Acquisition of
Securities (PAS) 1066/2007 of July 27.
The main regulatory bodies that govern M&A transactions
- The National Securities Market Commission
- The National Markets and Competition
3.2 Have there been any recent changes to regulations or
regulators that may impact M&A transactions or activity and
what impact do you expect them to have?
Political instability during 2016 has led to a reduction in
the number of amendments to the legal and regulatory framework.
The reelection of the acting prime minister has brought some
new appointments of heads of certain regulatory bodies.
However, we do not expect any major changes in current policy
lines to take place in the near future.
3.3 Are there any rules, legislation or policy frameworks
under discussion that may impact M&A in your jurisdiction
in the near future?
The Spanish legislative body is currently highly atomized,
with no political party or political alliance holding a stable
majority to pass legislative resolutions. Hence, in line with
the above, we do not expect any key legislative resolutions to
be passed in the near future.
SECTION 4: Market idiosyncrasies
4.1 Please describe any common mistakes or misconceptions
that exist about the M&A market in your jurisdiction.
It is notable that most foreign investors tend to approach
investments in Spain from a common law perspective. This leads
to some misconceptions about alternatives for structuring or
negotiating an M&A transaction in Spain. The best way to
avoid potential inconsistencies or ex-post weaknesses in a deal
is to involve legal counsel at the earliest stage possible. It
is commendable that more and more foreign investors in Spain
recognise this fact and the need to seek appropriate advice
during the entire deal process.
4.2 Are there frequently asked questions or often
overlooked areas from parties involved in an M&A
From a strictly legal standpoint and without prejudice to
the comments about planning in Question 4.1, another area often
overlooked regarding transactions in Spain concerns the
formalities that need to be observed. Spanish legal tradition
is very formalistic and consequently not only the content but
also the need to observe the formalities to document any
transaction in Spain need to be strictly observed. The
consequences of failing to observe these kinds of provisions
rank from the imposition of fines to the potential nullity of
4.3 What measures should be taken to best prepare for your
Based on the foregoing, seeking local legal advice and
involving the local counsel in all the phases of the deal (from
the preliminary negotiations until completion of the relevant
post-closing formalities) is crucial. Even if the transaction
is not subject to Spanish Law, there are certain mandatory
legal provisions that will apply to any deal that takes place
SECTION 5(a): Public M&A
5.1 What are the key factors involved in obtaining control
of a public company in your jurisdiction?
a) Control of a listed company in Spain is
deemed to take place in the following scenarios:
(i) direct or indirect acquisition of a
percentage of voting rights equal to, or in excess of 30%;
(ii) holding any interest carrying less than
30% of the voting rights but appointing, within 24 months
following the acquisition, a number of directors which,
together with those already appointed by the bidder, if any,
represents more than one-half of the members of the board of
b) Whenever a person gains control of a
listed company according to the parameters mentioned above,
that person will be obliged to launch a takeover bid for all
the securities of the target at a price that is considered
c) Control of a listed company may be gained
by any of the following means:
(i) Acquisition of securities
that grant direct or indirect voting rights in the company;
(iii) Indirect or unexpected
takeovers (in situations such as mergers, restructuring or
others that result in control), as described in PAS.
d) Hostile bids are
5.2 What conditions are usually attached to a public
Structure, content and procedure for formalising a public
takeover offer are regulated by Spanish law. The most relevant
conditions that need to be observed in any such offer are the
a) An offer may
be placed in the form of an acquisition, exchange of shares or
a combination of both;
b) The offer
must ensure equal treatment of security holders who are in the
shall be provided to ensure that the obligations assumed within
the offer are honoured.
resources to file the offer and the content and requirements
are regulated by PAS.
submission of the offer is subject to the prior authorisation
of the NSMC.
f) The term to
accept the offer is determined by the offeror. However, it
shall necessarily be between 15 and 70 days.
5.3 What are the current trends/market standards for break
fees in public M&A in your jurisdiction?
Break fees are common in public M&A transactions in
However, break fees are governed by Spanish law and are
particularly subject to the following conditions:
a) They can
only be agreed with the first offeror;
b) They may not
exceed an amount equivalent to one percent of the total amount
of the offer;
c) They need to
be approved by the management body of the target company;
financial advisors of the target need to pass a favourable
report on the break fees; and
e) They need to
be explicitly detailed in the offer document.
SECTION 5(b): Private M&A
5.4 What are the current trends with regards to
consideration mechanisms including the use of locked box
mechanisms, completion accounts, earn-outs and escrow?
As previously mentioned, private M&A deals have been
growing more and more complex during the last years. This
process has led to a plethora of different structures and of
mechanisms to determine the price of the transaction.
Differences between sectors in this regard are also gradually
increasing. Hence, it is difficult to identify general trends
in the whole M&A market.
In any case, earn-outs and escrows continue to be the most
recurrent mechanisms for buyers to secure part of their
investment, while locked box or completion account mechanisms
are more frequently seen in specific sectors such as M&A
transactions related to project companies.
5.5 What conditions are usually attached to a private
As opposed to public takeovers, private takeovers are not
governed by Spanish legislation and consequently the parties
may choose the mechanism they find most appropriate to initiate
a negotiation. Based on the foregoing, there is no formal or
standard structure for private takeover offers. It will vary on
a case by case basis depending on multiple factors such as the
profile of the parties, the size of the transaction, the
urgency to close the deal or any other specific characteristic
of the transaction.
Nevertheless, when it comes to competitive tender processes,
and notwithstanding the preceding paragraph, some common
features of the process for launching a private takeover offer
are the following:
i) Bidders are
granted access to a part of the target´s information and
documentation to carry out a high level due diligence.
draft a tentative offer in the form of heads of terms, letter
of intent or any other similar document describing the main
terms of their offer (for example, price and valuation of the
target, price adjustment mechanism, funding sources and/or
guarantee for the offered price, potential conditions
iii) The bidder
that has submitted the best offer is granted an exclusivity
period by the seller(s) to negotiate the terms of the
5.6 Is it common practice to provide for a foreign
governing law and/or jurisdiction in private M&A share
On the one hand, M&A transactions are seldom subject to
a foreign law in Spain. There are many reasons for this, but we
would highlight the following:
a) Spanish Law
provides for a secure, balanced, fair and stable legal
environment which investors can completely rely on.
b) There are
parts of Spanish legislation, especially those that refer to
the structure and governance of limited liability companies
which most frequently form the target companies of M&A
deals, that are mandatory and cannot be waived by mutual
consent of the parties. Hence, submitting a deal to a foreign
law could give rise to disputes in relation to conflict of
On the other hand, it is increasingly more frequent to
submit M&A deals to a foreign jurisdiction. In this case,
it is particularly recurrent that a transaction is subject to
arbitration and specifically to the jurisdiction of
international, unbiased, well reputed arbitrators. The main
reasons for this are to avoid the delays that Spanish Courts
are experiencing and to ensure that the members of the court
that will decide on the specific controversy are individuals
with reputed experience and long-time background in the
particular subject matter.
5.7 How common is warranty and indemnity insurance on
private M&A transactions?
Warranty and indemnity insurance on private M&A
transactions is also gaining ground lately. Especially in cases
where the seller is an institutional investor looking for a
clean exit, the parties agree to insure any liability that
could arise for the seller in connection with the
This increasing trend is also driving the insurance
companies to offer new, more specialized and price competitive
products to the market.
SECTION 6: Outlook 2017
6.1 What are your predictions for the next 12 months in the
M&A market and how do you expect legal practice to
We expect the growing trend initiated two years ago to
continue in 2017 and even increase. The real estate and
financial sectors, as well as the technological and energy
sectors, could be the most dynamic, following the trend of
The main indicators for these conclusions are the
predictions of a stable political background in the years to
come for the reasons explained above, the consolidation of
Spain as one of the strongest economies in the eurozone and the
fact that Spanish companies have gained interest for foreign
investors due to the restructuring and consolidation decisions
adopted during the financial crisis.
Fernando de las Cuevas Castresana
Partner, Gómez-Acebo &
T: 34 91 582 91 32
F: 34 91 582 91 14
Fernando de las Cuevas specialises in M&A,
banking law, securities market's law, collective
investment institutions, and family and private equity
businesses. He is consistently recognised in all
prestigious legal directories, including Best Lawyers,
Chambers and Partners, Legal500, IFLR1000 and Who's
Who. He is particularly renowned for his commendable
M&A and financial knowledge.
De las Cuevas joined Gómez-Acebo & Pombo
Abogados in 1983. He was a foreign associate at
Shearman & Sterling in New York from 1985 to 1986.
He has been a partner of Gómez-Acebo & Pombo
Abogados since 1990 and managing partner from 1998 to
2000. Currently he is the head of M&A. He holds a
master of law, a bachelor of business science and a
diploma in European studies from the Universidad de
Deusto (1981), and a diploma in higher European studies
from the College of Europe, Bruges (1982). He received
a research scholarship from the European Free Trade
Association, Geneva (1982-1983), and graduated from the
PIL course at Harvard Law School (1990). He is fluent
in Spanish, English and French.
Ignacio de la Fuente Muguruza
Associate, Gómez-Acebo &
T: 34 91 582 93 87
F: 34 91 582 91 14
Ignacio de la Fuente graduated in law and business
sciences from the Universidad Pontificia de Comillas in
Madrid, and obtained a scholarship from the University
of Texas in Austin where he developed his studies in
business sciences. De la Fuente is an associate at
Gómez-Acebo & Pombo Abogados, and his
specialisations include M&A, family and private
equity businesses and insolvency proceedings. He has
also worked as head of the legal department of Hyundai
Motor Group in Spain. He is a member of the
Guipúzcoa Bar Association and he is fluent in
Spanish, English, German and Basque.