Unlisted savings bank Caja Madrid seeks to control more than 23 percent of takeover target Iberia Lineas Aereas de Espana, aiming to disrupt a potential bidding war for the country's flagship carrier.
Madrid-based Iberia, Spain's top airline by revenue, has been approached by two bidding groups with potential offers of US$5.25 per share or higher.
Caja Madrid, which owns 10 percent of Iberia, has agreed to buy another 13 percent of the airline from cigarette distributor Compania de Distribucion Integral Logista and banking giant Banco Bilbao Vizcaya Argentaria for $5.25 a share, or about $671 million.
Caja Madrid said the acquisitions seek to position the bank as a stable, permanent shareholder and eliminate the uncertainty surrounding the flagship carrier after two bidding groups approached the company but failed to put a binding offer on the table.
Iberia is a key company for the Madrid local government - which also controls Caja Madrid - as the Barajas airport generates around 170,000 jobs in and around Spain's capital.
BBVA's and Logista's stock sale falls under a shareholders' pact that gives Iberia's main shareholders the right of first refusal on all such sales. The share price can be adjusted within a 12-month period if the buyer then resells the shares at a higher price.
British Airways, which also owns 10 percent of the company and is linked to one of the two groups that have expressed interest in bidding for the company, has up to seven days to decide if it wants to buy some of the shares.
Iberia received a takeover approach in March from US private equity firm TPG, which made a preliminary offer for Iberia of $5.25 per share, or $4.97 billion. It then put together a bidding group, including key Iberia shareholder British Airways and several Spanish financial investors.
The price infuriated key shareholders such as Caja Madrid, as it was seen as too low. Tensions rose on Iberia's board as British Airways decided to join the bidding group, but refused to put any cash for a potential bid.
In addition, last week a group of investors led by Spanish private-equity firm Gala Capital approached Iberia with an indicative offer price range of $5.25 a share to $5.69 a share, valuing Iberia at as much as $5.48 billion.
Iberia's board will hold its regular monthly meeting today afternoon.
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