Goldman in Middle of Gas Natural Spat

Article excerpt

Byline: Michael Hoare

Goldman Sachs was put in tight spot last week when long-term client Repsol YPF, the Spanish oil giant, came out strongly against a bid the US bank had put together on behalf of Gas Natural.Repsol, which appointed five of Gas Natural's 12 board members and has a 24% stake in the company, responded angrily to the [euro]15bn ($16bn) bid for Iberdrola, the Spanish energy group. It did not object to the logic of the bid but to its hostile nature, timing and what Repsol saw as an incomplete evaluation of the competition and regulatory hurdles.

The oil group also said it had only learnt about a Monday board meeting to approve the bid at midday on Sunday. Gas Natural declined to comment on when it had let Repsol in on the plan, but sources close to the company said Repsol had been involved in the detailed planning for three or four months.

Either way, Repsol's reaction makes life more complicated for Goldman, which sold a huge [euro]2bn block of Gas Natural shares for Repsol last May, and advised it when Iberdrola was the subject of several takeover offers in 2000.

Antonio Gomis, director of external relations at Repsol, is too diplomatic to admit that the management was angry with Gas Natural or Goldman, but says his company could have played a positive role in garnering shareholder support, as it did in 2000 when Gas Natural tried an earlier, unsuccessful offer for Iberdrola.

Spain's leading investment banks often find themselves opposing clients in deals because there are only a handful of large companies. Morgan Stanley, whose head of Spanish M&A, Andres Esteban, is advising Iberdrola, and Goldman, whose M&A team in Madrid is led by Juan del Rivero, frequently find themselves having to manage potential conflicts carefully, especially given the political nature of many senior business appointments in Spain. But Goldman's case is more acute than most because of the unexpected vigour of Repsol's reaction.

Repsol's stance on the bid puts it at odds with La Caixa, the Barcelona savings bank that owns about 31% of Gas Natural. It is the first time the two have fallen out publicly over a shareholder agreement they put in place when they formed Gas Natural in 1991, when Repsol owned 47% and La Caixa 25%. Since then the shareholder pact has been adjusted and readjusted, Repsol cut its stake to 23% and La Caixa increased its to 31%, but the two companies still appoint six board members each. Antonio Brufau, chairman of La Caixa, is also chairman of Gas Natural.

Repsol and La Caixa revealed last week that they would be prepared to renegotiate those terms, depending on the outcome of the takeover attempt. …