The Spanish have closed ranks – and squeezed British Airways out.
The British airline, who had teamed up with TPG to present a €3.4bn offer for Iberia, on Monday confirmed that it would not be contesting moves by Caja Madrid, the Spanish bank, to become the Spanish flag-carrier’s largest shareholder.
BA, which controls 10 per cent of Iberia, had until midnight to exercise pre-emptive rights over a further 7 per cent put up for sale by BBVA, one of the five core shareholders. Two of the core shareholders, BBVA and Logista, have now said they wanted to sell their shares to Caja Madrid, meaning that its shareholding could reach 23.3 per cent.
BA, in reality, didn’t have much choice. The UK airline and its partners, including three Spanish private equity groups, have insisted that any bid from them would be conditional on acceptance by all the main shareholders.
But Caja Madrid has consistently come down against the takeover, on the basis that a sale could mean that Madrid’s Barajas airport could be sidelined as a European hub. Iberia has built the airport into a key jumping off point for flights between Europe and Latin America.
With a rival all-Spanish grouping led by Gala Capital now in the race, and the regional government against a takeover by another European carrier, BA has little to gain by upping its stake and hoping that it could win through in the face of Spanish intransigence.
With the bid for Iberia seemingly dead in the water, the question is now whether BA bothers to hold onto its stake in the Spanish airline. BA’s CFO Keith Williams said on Monday that the position as Iberia’s key industrial partner “remains important and is not dependent on an increase in shareholding.” Is it though dependent on a shareholding at all?