Could Spain and Algeria throw a wrench in Taqa’s potential Naturgy takeover? The Spanish and Algerian governments are each considering potentially blocking or otherwise negotiating more preferential terms for Abu Dhabi National Energy Company’s (Taqa) potential acquisition in Spanish gas producer and renewable energy player Naturgy, according to separate reports from Spain’s El Debate and Algerian newspaper Echorouk El Yawmi over the weekend.

Spain is considering its options: Spain’s Sánchez government is reportedly looking to “facilitate” Taqa’s takeover bid for 100% of Naturgy, on the condition that Taqa would then sell back 10-15% of the company to the Spanish government, El Debate reports, citing sources it says have firsthand knowledge of the matter. The government is reportedly looking to ensure it maintains a stake in Naturgy, which it considers to be a “strategic company” since it is Spain’s main gas supplier, El Debate says. If the government is unable to reach an agreement to that effect, it could move to block the transaction altogether, according to El Debate’s sources.

Enter the “anti-takeover shield”: Spain introduced legislation back in 2020 (pdf) introducing a system known as the “anti-takeover shield” that granted the government the right to veto foreign investors’ acquisitions of companies deemed to be “strategic.” The regulation applies to the acquisition of a stake of 10% or more of listed companies, or acquisitions valued at EUR 500 mn or more for unlisted companies. The rules were initially introduced during covid-19, when foreign investors were vying for acquisitions to capitalize on market volatility that saw company valuations plummet, according to Chambers and Partners. With these rules in place, the Spanish government has the authority to block Taqa’s takeover bid for Naturgy, El Debate explains.

IN CONTEXT- Spanish protectionism is on display right now as the government there looks to ensure Saudi telecom operator Stc doesn’t become the largest single shareholder in mobile network outfit Telefonica, EnterpriseAM Saudi has reported.

Algeria is reportedly also not too keen on the agreement, and could move to block the transaction, Echorouk says, without providing further details. Algerian state-owned oil company Sonatrach holds a 4.1% stake in Naturgy and is a major international partner of the Spanish energy company. Naturgy purchases Algerian gas, which is transported through the Medgaz pipeline from Algeria’s Beni Saf to the South of Spain. Sonatrach holds a 51% stake in the pipeline, with Naturgy holding the remaining balance.

Background: Taqa is in discussions with Naturgy’s two largest shareholders — CVC and GIP — to potentially acquire their stakes in the Spanish company. The company confirmed it is discussing “a potential cooperation in relation to Naturgy” with the company’s largest shareholder, Criteria Caixa last week.

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