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?
The M&A market in Spain over the past 12 months has
experienced a sharp increase that consolidates the upward trend
initiated in previous years. The robust economic environment
and political stability have helped boost this process,
although conversely the political turmoil in Catalonia has been
the main concern.
The most active sectors in the M&A field during this
period have been real estate, technology and internet
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), 2,185 M&A
transactions have been reported during 2017 for an aggregate
amount of €113 billion. This represents an increase by
8.01% in the number of transactions and by 44.22% in volume as
compared to 2016.
1.3 Is your market driven by private or public M&A
transactions, or both? What are the dynamics between the
The Spanish market is usually driven by both private and
public M&A transactions. Even though the public market has
been at a standstill over the last few years, 2017 has seen a
substantial recovery with 25 IPOs and 48 share capital
increases in public companies.
1.4 Describe the relative influence of strategic and
financial investors on the M&A environment in your
In recent years, both strategic and financial investors have
increased their positions in the Spanish market and are key
players in M&A investment deals in Spain. It is frequent to
see them join forces to pursue large M&A transactions.
SECTION 2: M&A structures
2.1 Please review some recent notable 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 2017
- The acquisition by Blackstone of 100% of HI Partners
Holdco Value Added from Banco Sabadell.
- The takeover bids for Abertis by Hochtief (ACS) and
- The acquisition of Banco Popular by Banco Santander.
The acquisition of Banco Popular by Banco Santander has been
especially relevant from a legal perspective as it was realised
for the symbolic price of €1 and is the first transaction
carried out pursuant to the single resolution mechanism
approved by the European authorities.
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 over the last few years. Not only new
actors, but also more complex deal structures and financing
formulas have driven the main transactions. This complexity
obliges investors to seek high-skilled, imaginative and
versatile advisors who understand their needs and design an
ad-hoc, specific structure to protect their interests.
SECTION 3: Legislation and policy changes
3.1 Describe the key legislation and regulatory bodies that
govern M&A activity in your jurisdiction.
Key legislation of M&A transactions in Spain are:
- Ley de Sociedades de Capital (the Corporate Enterprises
Act or CEA) 1/2010 of July 2;
- Ley de Modificaciones Estructurales (the Corporate
Restructuring Act or CRA) 3/2009 of April 3; and
- Ley del Impuesto sobre Sociedades (the Corporate Income
Tax Act or Cita) 4/2004 of March 5.
Also, when strictly referring to public M&A
- Ley del Mercado de Valores (the Securities Market Act or
the 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 or the PAS)
1066/2007 of July 27.
The main regulatory bodies that govern M&A transactions
- The National Securities Market Commission
(Comisión Nacional del Mercado de Valores or CNMV);
- The National Markets and Competition Commission
(Comisión Nacional de los Mercados y La Competencia or
|NB: Values may exclude
certain transactions, for example asset
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?
At the end of December 2017, in a royal decree the Spanish
Government approved the transposition into the Spanish legal
system of the regulations of Markets in Financial Instruments
Directive II (Mifid II), the European directive on markets in
financial instruments that seeks to make the European markets
fairer, more competitive, and less likely to collapse.
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 atomised,
with no political party or political alliance holding a stable
majority to pass relevant legislative resolutions. We do not
foresee major legal modifications to be passed in the near
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 M&A transactions 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
tend to realize this and the need to seek proper advice during
the whole 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 previous comments about planning in Section 4.1, an
overlooked area in transactions in Spain concerns the
formalities to be observed. Spanish legal tradition is very
formalistic and consequently not only the content but also the
formalities for documenting any transaction in Spain need to be
strictly observed. The consequences of not observing these
provisions rank from the imposition of fines to the potential
nullity of an agreement.
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 (i.e.
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 in Spain.
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%; or
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, represent more than
one-half of the members of the board of directors.
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 may be considered equitable.
c) Control of a listed company may be gained by any of the
i) Acquisition of securities that grant direct or indirect
voting rights in the company;
ii) Shareholders´ agreements; or
iii) Indirect or unexpected takeovers described in PAS.
d) Hostile bids are permitted.
5.2 What conditions are usually attached to a public
The structure, content and procedure for formalising a
public takeover offer are regulated by Spanish Law. The most
relevant conditions that need to be observed are the
a) They may be placed in the form of acquisitions, share
exchanges or a combination of both;
b) The offer must ensure equal treatment of security holders
that are in the same position;
c) Collateral shall be provided to secure the obligations
assumed in the offer.
d) The manner in which the offer is filed, along with its
content and requirements, are ruled by PAS.
e) Submission of the offer is subject to prior authorisation
of the CNMV.
f) The term to accept the offer is determined by the
offeror. However, it must 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, they are governed by Spanish Law and specifically
subject to the following conditions:
a) They can only be agreed with the first offeror;
b) The break fee may not exceed an amount equivalent to 1%
of the total amount of the offer;
c) The break fee needs to be approved by the management body
of the target company;
d) The financial advisors of the target need to pass a
favourable report on the break fee; and
e) The break fee needs to be explicitly detailed in the
SECTION 5(b): Private M&A
5.4 What are the current trends with regard to
consideration mechanisms including the use of locked box
mechanisms, completion accounts, earn-outs and escrow?
As already mentioned, private M&A deals have become more
and more complex over the last few years. This process has led
to a plethora of different structures and especially of
mechanisms to determine the price of the transaction.
Differences between sectors in this regard are also increasing.
Hence, it is difficult to determine general trends in the whole
In any event, 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 takeover offers, private offers are not
governed by Spanish law 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 characteristics of the
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
Bidders are granted access to certain information and
documentation of the target to carry out a high level due
Bidders draft a tentative offer in the form of a head of
terms, letter of intent or any other similar document
describing the main terms of its offer (e.g. price and
valuation of the target, price adjustment mechanism, funding
sources and/or guarantee for the offered price, potential
The bidder that has made the best offer is granted an
exclusivity period by the seller(s) to negotiate the terms of
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 in Spain are seldom
subject to a foreign law. There are many reasons for this, such
as the fact that Spanish Law provides for a secure, balanced,
fair and stable legal environment that investors can completely
There are provisions of Spanish law, particularly those
related to the structure and governance of limited liability
companies such as those that most frequently constitute the
target companies in M&A deals, which are mandatory and
cannot be waived by mutual consent of the parties. Hence,
submitting a deal to a foreign law could give rise to various
conflicts of laws disputes.
On the other hand, it is more frequent to submit M&A
deals to a foreign jurisdiction. In this case, it is
particularly recurrent for a transaction to be 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
experience nowadays and to ensure that the members of the Court
who will decide on the specific controversy are individuals
with reputed experience and long-term background on 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 sell side is formed by an institutional investor that
is looking for a clean exit, the parties agree to insure any
liability that could arise for the seller in connection with
This increasing trend is also driving insurance companies to
offer new, more specialised and price competitive products to
5.8 Discuss the exit environment in your jurisdiction,
including the market for IPOs, trade sales and sales to
The robust economic environment and the strong dynamics that
currently characterise the M&A market in Spain have
provided liquidity and eased the exit environment, which is
also positively regarded by the market. The venture capital
sector in particular has experienced this process, along with
institutional markets such as public M&A or financial
SECTION 6: Outlook 2018
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 2018 and even increase. Real estate, technological
and also financial sectors could be the most dynamic, following
the trend of previous years.
The main indicators for these conclusions may be the
predictions of a stable political background during these years
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 years of the 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 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 and Legal500. He is particularly
renowned for his commendable M&A and financial
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. He is currently 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 at Austin where he developed his studies in
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 foreign
associate at the New York office of the firm. He is
fluent in Spanish, English and German.