European Event-Driven Analyst

Jesus Rodriguez Aguilar

Jesús is an Insight Provider (Event-driven) on the Smartkarma network, where he looks across sectors at opportunities arising from securities mispricing (both credit and equity), share classes, bid announcements, prospective bids, and special situations. He has served as Economic and Business Advisor at the Spanish Congress in Madrid. Prior to that, he has worked in the City of London: as a Credit Analyst at Bloomberg; Event-driven associate at former boutique European Research; and doubled as Special Situations and Equity-linked VP (convertible bonds) at Merrill Lynch. Jesús has an MBA from the London Business School, a BA (Hons.) degree in Economics from the Complutense University in Madrid, and a BA (Hons.) in Law from U.N.E.D., also in Madrid.

IFM/Naturgy: Board Opinion And Bid Scenarios

IFM/Naturgy: Tender Results & Ibex-35 Index Implications

Event-Driven

The National Securities and Market Commission (CNMV) has authorized the partial offer launched by IFM on <a href="https://www.smartkarma.com/entities/naturgy-energy-group-sa" target="_blank" data-smartkarma-citation="entities:21271:1" rel="noopener">Naturgy Energy Group SA (NTGY SM)</a> and has  announced that the acceptance period will run from 9 September to 8 October, both included.
The CNMV has approved the prospectus. Starting today, the Board of Naturgy has ten days to issue an opinion about the fairness of the offer.
The success of IFM's bid might be hindered by:
<ul>
<li>
the intentions of Criteria Caixa to strengthen its position as the top shareholder (Criteria Caixa has increased its stake up to 25.997% of the share capital and intends to acquire up to 29.9%),
</li>
<li>
the improvement in the economic outlook, and
</li>
<li>
the increase in the price of natural gas since the offer announcement (26 February).
</li>
</ul>
An improved economic outlook could provide grounds for requesting a sweetening of the offer. The Board of Naturgy, which is due to issue an opinion on the IFM's takeover bid soon, could consider asking IFM for an improvement in the consideration.
The offer price is €22.07/share (cum dividend). There's a minimum acceptance condition of 17% of the share capital. If the offer succeeds, Naturgy's free-float could be substantially reduced (down to below 10%) and the company would leave the IBEX 35 index.
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<ul>
<li>IFM reserves the right to unilaterally lower the 17% threshold to 10%. "The offeror may freely reduce the minimum acceptance condition to 10% of Naturgy's share capital, waive the minimum acceptance condition as long as the acceptance of the offer is not less than 10% of Naturgy's share capital".</li>
</ul>
The apportionment will depend on whether any institutional shareholder tenders its shares, which seems unlikely. This means that retail shareholders will likely tender and chances for apportionment are reduced.
Recent research reports point to Naturgy's earnings growth potential within its new strategic plan. Naturgy's board, which is due to issue an opinion on the takeover, will likely consider them, both in terms of results and target price. Naturgy's shares are now below the price offered by IFM, but there is the risk that the offer price may not be attractive enough and the offer fails to achieve the necessary acceptances.
A very reasonable scenario is that Criteria Caixa will resume its share purchases, thus raising the price above the current offer.
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</div>
Gross spread is 1.36% (as of midday 9 September). A sweetened offer is likely, as are new share purchases by Criteria. Core strategy is long and tender (or upon possible share price increases, be ready to sell into strength).

The National Securities and Market Commission (CNMV) has authorized the partial offer launched by IFM on Naturgy Energy Group SA (NTGY SM) and has  announced that the acceptance period will run from 9 September to 8 October, both included.
The CNMV has approved the prospectus. Starting today, the Board of Naturgy has ten days to issue an opinion about the fairness of the offer.
The success of IFM's bid might be hindered by:


the intentions of Criteria Caixa to strengthen its position as the top shareholder (Criteria Caixa has increased its stake up to 25.997% of the share capital and intends to acquire up to 29.9%),


the improvement in the economic outlook, and


the increase in the price of natural gas since the offer announcement (26 February).


An improved economic outlook could provide grounds for requesting a sweetening of the offer. The Board of Naturgy, which is due to issue an opinion on the IFM's takeover bid soon, could consider asking IFM for an improvement in the consideration.
The offer price is €22.07/share (cum dividend). There's a minimum acceptance condition of 17% of the share capital. If the offer succeeds, Naturgy's free-float could be substantially reduced (down to below 10%) and the company would leave the IBEX 35 index.



IFM reserves the right to unilaterally lower the 17% threshold to 10%. "The offeror may freely reduce the minimum acceptance condition to 10% of Naturgy's share capital, waive the minimum acceptance condition as long as the acceptance of the offer is not less than 10% of Naturgy's share capital".

The apportionment will depend on whether any institutional shareholder tenders its shares, which seems unlikely. This means that retail shareholders will likely tender and chances for apportionment are reduced.
Recent research reports point to Naturgy's earnings growth potential within its new strategic plan. Naturgy's board, which is due to issue an opinion on the takeover, will likely consider them, both in terms of results and target price. Naturgy's shares are now below the price offered by IFM, but there is the risk that the offer price may not be attractive enough and the offer fails to achieve the necessary acceptances.
A very reasonable scenario is that Criteria Caixa will resume its share purchases, thus raising the price above the current offer.


Gross spread is 1.36% (as of midday 9 September). A sweetened offer is likely, as are new share purchases by Criteria. Core strategy is long and tender (or upon possible share price increases, be ready to sell into strength).

Naturgy Energy Group SA

IFM/Naturgy: Start of Offer Period