Acting Vice President and Labor Minister Yolanda Díaz announced on Friday that she would work to block the entry of the Saudi group Saudi Telecom Company (STC) into Telefónica. “We cannot allow this operation to continue,” he said emphatically. Díaz has already forwarded this request to the first vice president, Nadia Calviño, on whom depends the application of the law that limits the new acquisition of foreign capital in strategic Spanish companies. “I will work to ensure that this operation does not take place,” Díaz announced in statements to the media in Rome before attending the presentation of a book with the city’s mayor, Roberto Gualtieri.
The leader of Sumar has claimed that the acquisition of 9.9% of Telefónica’s capital by the Saudi company for 2.1 billion euros could pose a risk to Spanish interests due to the data processed by the Spanish company. “Telefónica is a strategic company for our country and as such manages the most important thing in our lives, namely data, which is not just the oil of the 21st century, but everything that lies in it,” he assured. And he pointed out that Spain, in line with other EU countries, “must make progress on industrial issues and in strategic sectors.” “We need to think about what our strategic sectors are, who can be on the boards of those sectors and what the boundaries are,” he noted.
Shortly after the financial operation, which had been prepared in great secrecy, became known, the matter jumped straight onto the political stage. The Sumar-dependent wing of the government, with Díaz at the helm, showed that it is not positive about STC’s entry into the historic Spanish operator. Now it has confirmed its rejection and has established within its ranks the line to be followed regarding the entry of Saudi capital into the Spanish multinational.
Saudi Arabia has targeted European telecommunications companies, but in the case of Spain the matter has an additional political dimension, as Spanish legislation forces STC to seek government approval to acquire 4.9% of Telefónica’s capital, which they already control. to be transferred to 9.9%. If the current incumbent executive coalition agrees, it could perfectly apply the anti-takeover shield to stop the operations of a strategic company.
Sumar this week proposed capping foreign firms’ ownership in companies deemed strategic to 5%. However, party sources are keen to achieve this through the current regulations once they are before the Council of Ministers. “At this point, our country already has anti-takeover laws that allow the government to stop this operation,” the group’s sources say.
Díaz has already told Calviño that she is in favor of blocking the operation in the Council of Ministers. The First Vice President, on a trip to New Delhi for the G-20 summit from Brussels on Wednesday, said the executive branch was reviewing the scope of the financial operation and guaranteed that it would activate “the necessary mechanisms” to “ensure defense.” . Spain’s “strategic interests”. At the same time, he warned that this would also protect “Spain’s attractiveness” for foreign investment.
However, the Ministry of Defense will also intervene in this first line of protection. Its acting head, Margarita Robles, assured Friday that her department would review Saudi giant STC Group’s approval with “rigor” and “all seriousness,” making clear that “national security is a priority.” “Of course we will study it very thoroughly and with great attention because this operation actually concerns a strategic sector, namely defense,” he added.
Government permission
The Saudi sovereign wealth fund Public Investment Fund (PIF), owner of 64% of the STC operator, has already told the market that it holds a 9.9% stake in Telefónica, according to the National Market Commission. Securities (CNMV). The company states that this move was channeled through Green Bridge Investment, a Luxembourg-based investment vehicle fully controlled by STC and which owns both the shares and financial instruments contemplated in the transaction.
The information submitted to the regulator on Friday details that on September 5, the Green Bridge Investment Company acquired 4.9% of Telefónica’s shares and signed a purchase and sale agreement for 5% of the operator’s titles, ” “whose effectiveness depends, among other things.” others, with the consent of the Spanish Council of Ministers”. In other words, the Saudi group admits that it needs government approval to increase its stake from 4.9% to 9.9% of the capital.
According to the documents, Green Bridge Investment was founded on May 21, so the acquisition of shares in small packages to avoid alerting the market that STC was operating through Morgan Stanley took place over three and a half months. Thanks to this mechanism, the Saudi group was able to escape the reporting obligation when it reached the 3% of capital required by Spanish regulations, since this reporting limit is extended to 5% at the CNMV when it comes to financial companies They act as intermediaries for the Management and custody of securities.
According to the regulator’s records, on September 5, the Green Bridge Investment Company SCS, acting through its general partner, the Luxembourg company Green Bridge Management SARL, achieved 4.9% of the capital and financial instruments for another 5%, as stated in the CNMV -Report. Specifically, the Arab group owns 569.29 million shares of Telefónica – equivalent to 9.9% of the company’s share capital – of which 281.77 million are currently shares with effective voting rights and 287.52 million shares through financial instruments. The chosen scheme, which combines simple limited partnerships (SCS) and limited liability partnerships (SARL), is common among institutional investors when planning their investments.
Telefónica shares closed this Friday at 3,846 euros (+0.29%), ending the week with a chain of three consecutive closes in the green and a revaluation of the shares of 2.53% since the announcement of the creation of STC in The share price ends at 3,751 euros.
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