CAF is considering establishing itself as the white knight of ITP’s intricate sale. The Basque group is studying submitting an offer for the Spanish manufacturer of engines for civil and military aviation. To do this, it tries to convince another large Spanish industrial company to present a joint offer, according to market sources to CincoDías. The bids are between 1,300 and 1,500 million.
The sale of ITP is complicated. On the one hand, Rolls-Royce is obliged to sell its Spanish subsidiary to face the problems derived from the Covid-19 crisis. It is the cornerstone of a plan to attract up to 2.3 billion in divestments. The problem is that not just any buyer is worth it. It must have the approval of the Government.
So far all bids have been submitted by private equity funds. Goldman Sachs, who has been commissioned by Rolls-Royce to pilot the operation, has selected Bain, KKR, Towerbrook, Cinven and Platinum to proceed to the second phase. Carlyle and CVC have already dropped out of the process. The bids are between 1,300 million and 1,500 million.
But the Government is clear about it. It will not authorize an international investment fund to take over a key company. For more than a year, the council of ministers has the ability to veto purchases of Spanish companies by foreign investors, provided they are located in sectors considered as strategic, such as defense. In addition, a large part of ITP’s turnover comes from contracts to supply the State with engines for military aircraft, which gives it a particularly relevant role.
Already in 2017 the Government imposed conditions to shield the Spanishness of the group, when Rolls Royce agreed to purchase the group from Sener for 700 million. Among them, they were maintaining the technological and industrial capacities in Spain, that half of the Board of Directors is Spanish – among them the president and the CEO -, maintaining the headquarters in Spain and that there is a representative of the Ministry of Defense on the Council .
For this reason, both the central and the Basque Executive – ITP has its headquarters in Vizcaya – try to convince Spanish companies to participate in the bid. One of those that is doing numbers is CAF. It has been willing to present an offer that shields the Spanishness (and Basqueness) of the company. But to do this, it is looking for another Spanish industrial group with which to form a consortium. CAF sources have declined to comment to this newspaper.
Aciturri, who already owns Alestis, also showed his willingness to take over ITP at the beginning of the process. At the moment, its offer is not among those chosen by Goldman Sachs, although it maintains the ace up its sleeve of partnering with one of the funds that are still in contention. This is an open way for venture capital funds to save their bet to acquire ITP. They put the money and the chosen company the Spanish name. The other is that Rolls-Royce renounces its claims to get rid of the entire firm and agrees to retain a minority stake that sends a signal of continuity to the Government.
Another name that resonates to form a coalition either with CAF or with a fund is Indra. The company owned by SEPI already tried to buy ITP in 2019. The idea was to spin off the purely consulting business from the defense business, which he planned to focus on. But he has declined, for the moment, to participate in this new auction. Another name on the table that for the moment has not taken the step is Sener, who was already the owner of ITP in the past.
Aernnova participates in some way already in the process, through its owner, Towerbrook. In fact, controlling a Spanish industrial group already adds possibilities to its bid. Another possible candidate is Gestamp.
In addition to trying to protect the supply of airplanes for the army, under the idea that a Spanish company remains with ITP underlies the intention of the Government to create large national industrial groups. Even before the pandemic, the EU had set itself the objective of reindustrializing Europe, which had been relocating most of its factories to China or other developing countries. Now, thanks to the recovery funds, they hope to put cruising speed on this target.
Potential buyers still have time. The period to send the final offers by ITP does not expire until the end of May. And it is expected that afterwards there will be a long process until a winner is chosen. Even after that, the Government has six months to authorize or not the operation. The sources consulted coincide in pointing out that this sale still has many more chapters left. And that it will hardly have an end before the end of the year.
More than 1,000 million cash to finance the operation
- Results. The main favorite among Spanish industrial groups to submit an offer for ITP is CAF. The company is based in Guipúzcoa and is dedicated to the manufacture of trains and railway equipment. It is listed on the Stock Exchange and has a capitalization of 1,370 million. In 2020 it obtained a profit of 10 million, 60% lower than in 2019. Sales increased 6% to 2,700 million. The company with a net financial debt of 311 million and a cash of 1,115 million.
- Shareholders. CAF’s main shareholder is its own employees, who control 25%. Behind is Kutxabank with 14%. And then the Mayoral family and the investor Daniel Bravo, who have 5% each. Finally, the Norwegian sovereign wealth fund has 3%.
- advice. Javier Martínez Ojinaga, until now coordinating director, was appointed CEO of the company last week. He will replace, as of September 1, the current president and CEO, Andrés Arizkorreta García, who will lose executive functions and will remain as president of the firm. The other members of the council are Marta Baztarrica, Carmen Allo, Ane Agirre, Julián Gracia, Ignacio Camarero, Juan José Arrieta, Luis Miguel Arkonada, Idoia Zenarrutzabeitia and Manuel Domínguez.