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Legal aspects of international mergers and acquisitions: Sacyr/Eiffage

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  1. Introduction.
  2. The Beginning of the Sacyr/Eiffage case.
  3. Trigger of the conflict.
  4. The action of France's stock-market authority and the judicial issues.
  5. The consolidation phase.
  6. The end of the conflict.
  7. Bibliography.

The Sacyr/Eiffage case involves two public construction companies, the Spanish Sacyr Villehermoso and the French Eiffage. First, let's introduce those two companies. Sacyr is a leading Spanish construction company based and listed in Madrid. It is publicly traded and part of the IBEX 35, the benchmark stock market index of the Bolsa de Madrid, Spain's main stock exchange. Its shares are currently traded in the Madrid, Barcelona, Bilbao and Valencia Stock Exchanges and in Portugal too. The company was founded in 1986 and named Sacyr in 1991. It acquired 24.5% of Vallehermoso in 2002, a leading housing business in Spain that was founded in 1921. The merger occurred in 2003 to create Sacyr Vallehermoso. Its structure is now composed of several business areas in several divisions: construction with Sacyr, housing with Vallehermoso, concessions with Itinere, property rental with Testa and finally services with Valoriza. Luis del Rivero is the Chairman of the company.

[...] The main issue of the case is to analyze how national legal restrictions can frame transactions involving international companies; once entered into a legal process, it seems hard to overcome those restrictions, even if the economic will of the two companies is to find an amicable agreement according to a more liberal conception of mergers and acquisitions. The Beginning of the Sacyr/Eiffage case In the beginning of 2006, Sacyr was still a minor shareholder of the Eiffage holding. April 5th 2006 Sacyr declared, in a binding intention letter, that it would not takeover Eiffage and that it would not launch a public offer. [...]


[...] Most of them were small companies focused on Spain and which do have enough financial surface to do such an investment. The fact that their investment in Eiffage does not seem financially but also strategically coherent was taken in account by the stock-market authorities but the major point is that their investment was concomitant. The aim of this action was to have a common policy in order to help Sacyr to change the composition of the board of directors and then to benefit of the industrial cooperation of the companies. [...]


[...] The consolidation phase After the start of legal proceedings which was a very contentious time both sides tried to build up again forces and to imagine end of crises scenarios. First of all Eiffage tried to prove that the AMF decision did not respect legal principles such as contradictory proceedings. Sacyr wanted also to gain political support by showing that this decision would be a kind of protectionism of French institutions. But its major goal in that period besides the judicial proceedings was to raise money. [...]

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