by Renee Cordes | Published September 29, 2011 at 12:42 PM
Spain has abruptly yanked plans to sell a minority stake in its state lottery operator, saying that poor market conditions make it impossible for it to pursue an IPO that had been expected to raise up to €7 billion ($9.5 billion). The retreat underscores the fragility of global IPO markets and the deep problems facing European countries looking to raise capital through asset sales.
"We studied the situation and made the decision we think is best for the Spanish people, because this company belongs to all of us," Spanish Finance Minister Elenea Salgado said in a radio interview following the decision, made late Wednesday, Sept. 28.
The state pulled the sale of 30% of Sociedad Estatal Loterias & Apuestas del Estado SA to avoid selling it at a discount to the company's book value of €20.8 billion, the Minister said. The decision comes a little more than a month after Salgado had insisted that market conditions would not affect the share sale.
Had the IPO gone ahead, it would have been the country's largest, eclipsing the €4.1 billion stock listing of green energy company Iberdrola Renovables SA in 2007. It would also have helped Spain avoid getting deeper into debt.
Spain's decision to keep Loterias off the block comes amid a raft of cancelled IPOs and asset sales in Europe and elswhere. Last week, France's Schneider Electric SA reportedly shelved a €1.4 billion sales of its Custom Senros & Technologies unit, while French retailer PPR SA temporarily pulled an auction of its Redcats catalog business after buyers failed to meet its roughly €1.5 billion asking price. Earlier this month in Germany, Siemens AG suspended plans to list to list its Osram lighting unit in an IPO of about €3.2 billion.
A long lit of international and Spanish investment banks had been lined up to advise on the Loterias IPO, including Goldman Sachs Group Inc., JPMorgan Chase & Co., UBS AG, Credit Suisse Group AG and Spain's Banco Bilbao Viczaya Argentaria SA and Banco Santander.
London-based law firm Clifford Chance LLP and Madrid-based law firm Uría Menéndez had been hired to provide legal counsel to the Spanish government, which reportedly had also enlisted PricewaterhouseCoopers International Ltd. as an additional adviser.
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Sociedad Estatal Loterias & Apuestas del Estado SA