Spanish power group Iberdrola said Monday it had agreed to sell a 6.16-percent stake in the company to sovereign wealth fund Qatar Holding Luxembourg for 2.021 billion euros as part of a "strategic partnership."
In a statement to the National Securities Commission (CNMV), Iberdrola said Qatar Holding would fully subscribe to a capital increase equivalent to 6.17 percent of its current capital for 1.906 billion euros. The purchase price was set at 5.633 euros per share, a discount of 5.5 percent to the closing share price on Friday. The fund will also buy a further 20.4 million shares held by Iberdrola as treasury stock (equivalent to a 0.37-percent stake) at the same price per share for 115 million euros. After the dilution of the capital increase, Qatar Holding's total interest in Iberdrola will be 6.16 percent.
The capital hike will dilute the stake of leading Spanish construction group ACS in Iberdrola, which currently stands at 20.2 percent. ACS and Iberdrola have been at loggerheads over ACS's demands for board representation. The utility has denied ACS access, claiming the builder is a direct rival in certain of its business areas.
The deal with Qatar Holding comes on the back of a trip last month to the Gulf state by Prime Minister José Luis Rodríguez Zapatero.
Iberdrola said the proceeds from the deal with Qatar Holding would allow it to "strengthen its financial position" and maintain its debt ratios in the wake of its proposed offer last week for its renewable energy listed unit Iberdrola Renovables, and the acquisition of Brazilian electricity producer Elektro for $2.9 billion (about 2 billion euros). Iberdrola calculated its additional funding needs at 3 billion euros. The Elektro deal is payable in the next few weeks.
Iberdrola also announced a program to buy back 247.5 million shares to facilitate the share swap component of its offer to buy out minority interests in Renovables. Iberdrola initially planned a share issue to carry out the deal, which will no longer be necessary. The terms of the Renovable share swap were slightly altered as a result of the capital increase. Iberdrola is also offering to pay Renovables shareholders a special dividend of 981.1 million euros. It expects to complete the delisting of Renovables in July.
Iberdrola said it and Qatar Holding will cooperate in the development of new business opportunities in emerging countries. The Spanish utility will set up its regional headquarters for the Middle East in Qatar.