Uría, Allen & Overy, Garrigues, Slaughter & May and Clifford Chance advised M&A deal in Spain

Infraestructuras de Alta Tensión S.A. (Inalta) (a vehicle company controlled by funds managed by CVC Capital Partners) acquired all the assets comprising the electricity transmission grid of Iberdrola Distribución Eléctrica, S.A.U. (a company wholly owned by Iberdrola S.A.). The total price paid by Inalta to Iberdrola including VAT has been Euro 934.6 million.

Uría & Menéndez advised CVC Capital Partners for over a year in this transaction with regard to Spanish and EU. Slaughter & May (London and Madrid) were the CVC´s English lawyers while Luis Guerreiro from Garrigues (Madrid) also provided tax advice to CVC.

Some of the Uría & Menéndez lawyers who were involved in the deal included Juan I. González, Fernando Morales and Cristina Navarro co-ordinating the matters related to the acquisition of assets and the regulatory issues. Carlos de Cárdenas Smith was in charge of the financing issues with Sebastián Sáenz de Santamaría and Bárbara Sotomayor; in collaboration with Richard Slater, Khasruz Zaman and Robert Fish (in London) and Nitin Palekar (in Madrid) from Slaughter and May who advised on the English law issues. Jaime Folguera, Edurne Navarro, Alfonso Gutiérrez and José Carlos Engra were in charge of the anti-trust issues in Brussels and in Madrid. Sara Rojas and Martha Pulido advised on telecom issues.

Allen & Overy (Madrid) was the legal advisor of Iberdrola. The Allen & Overy team was lead by the Madrid-based partner Iñigo Gómez-Jordana and assisted by tax partner Carlos Albiñana and associates Jose Antonio Sánchez, Cristina Rodríguez and Pedro Callol. Commenting the transaction to Latin Counsel, Gómez-Jordana said that "This deal is indicative of the change taking place in the Spanish energy market, due to be liberalised in three months, and from a legal perspective it is a new complex structure."

María Luisa Alonso, Elena Prieto nd Ignacio Blanco(Madrid) and James Johnson y Emma Folds (London), from Clifford Chance were the legal advisor of Deutsche Bank AG while José Manuel de Carlos, José María Fernández-Daza and Miguel Odriozola (in Competition Law), and Teresa Martín and María José Cruz also from Clifford Chance (Madrid)(who were assisted by Verónica Enciso, Epifanio Pérez, José Luis Zamarro, Ignacio Borrego, and Juan Milagro). Guillermo Muñoz Alonso from Garrigues advised Red Eléctrica.

The transaction was initially designed as the acquisition of only certain transmission assets of Iberdrola, however, the Spanish authorities raised certain difficulties regarding the transaction. Consequently, the deal was restructured in order (i) to extend the scope of the transaction to all the transmission assets of Iberdrola, and (ii) to allow the participation of Red Eléctrica de España, S.A. in the transaction. As a result, and after obtaining the relevant authorizations by the Spanish Electricity, Telecomunications and Competition Authorities and by the European Comission, Inalta has acquired from Iberdrola all its electricity transmission assets and Red Eléctrica has acquired from CVC a 25% indirect participation in Inalta.

Why the deal is innovatory: according to Uría “due to the very special characteristics of the electricity market in Spain, this one-off transaction has indeed been innovatory and ground-breaking. This deal has triggered, on the one hand, the acquisition by Red Eléctrica of the two other large transmission grids owned by electricity companies (Endesa and Unión Fenosa), and, on the other hand, changes in the law granting Red Eléctrica a mandatory pre-emption right on any future sales of electricity transmission assets in Spain (thus de facto restricting this deal from being replicated in the power transmission business in Spain). Arguably, it has been one of the most difficult deals to come to fruition in Spain flying in the face of the initially strong regulatory objections raised in a highly regulated environment. In addition, this deal has probably been the largest private equity transaction in Spain during 2002 and probably to date, combined with one of the largest non-recourse financings in this country.”