Petróleos Mexicanos, the state oil monopoly, argues that its alliance with a Spanish construction company, Sacyr-Vallehermoso (Sacyr ) to vote as a bloc as shareholders in Repsol-YPF, a large Spanish-Argentine oil company, is part of its strategy to diversify and gain access to modern technology.
Pemex has recently increased its shareholding in Repsol from 4.8% to 9.8% but more importantly it has decided to ally itself with a Spanish construction company, Sacyr, which holds 20% of Repsol. Sacyr’s apparent strategy is to force Repsol to spend less on capital investment and more on dividends to shareholders.
Another possibility is that Sacyr, which is heavily indebted, and Pemex have announced their stake-building in order to trigger a takeover bid for Repsol. Although both Sacyr and Pemex have been long-term investors in Repsol, they would probably happily sell-out now for a quick buck. Pemex might even be prepared to take bits of Repsol if the company was carved up by an asset-stripper.
Pemex officials believe that Repsol’s experience in seismic interpretation can help it develop the geologically complicated Chicontepec oilfield and might also be useful in deep water exploration in the Gulf of Mexico. According to a Pemex strategy document (Contexto del Aumento de Participación de Pemex en Repsol) leaked to the Mexican press, Pemex also sees Repsol as a preferred partner in the new risk-sharing subcontracting contracts known as Contratos Integrales. The first of these were awarded last month and though Repsol bid, it was unsuccessful (see MNR-11-09).
Pemex spent US$1.6bn on increasing its stake in Repsol at the beginning of September. Such expenditure has led to questions in Mexico’s congress about Pemex’s strategy. Pemex argues that buying 10% of any other similarly sized international oil company could have cost between US$10bn and US$30bn.
Pemex’s move in Repsol has also alarmed the Argentine government which holds a golden share in Repsol’s main Latin American operation which is based around Argentina’s former state oil company Yacimientos Petrolíferos Fiscales (YPF) which was taken over by Repsol. When the Argentine government allowed Repsol control of YPF in 2009 it expected Repsol to increase investment in Argentina. The Argentine government is now concerned that Pemex’s move will prompt Repsol to move resources from Argentina to Mexico. The unexpected and rushed deal has also sparked controversy in Spain and Mexico.
On 29 August Pemex, which held a 4.81% stake in Repsol, announced an agreement with Repsol’s majority stakeholder, the Spanish construction company Sacyr, whereby Pemex would purchase an additional 5% stake in Repsol. Sacyr owns 20.01% of Repsol. The deal makes Sacyr-Pemex the largest stakeholder in Repsol, with 29.8%, giving it increased influence over the company board.
The pact was designed to fall just below the share ownership cap of 30%. Any stake above that would have forced Sacyr-Pemex to make a public share purchase offer under Spanish law. Pemex bought the Repsol shares on 2 September.
Repsol owns 57.43% of YPF. The second largest stakeholder is the Petersen Group (owned by the Eskenazi family,) with 25.4%. The Argentine government, which has a representative on YPF’s board (Roberto Baretta) and retains a veto right, reacted to pemex’s move by issuing a formal letter asking the parties involved to notify it whether “the change in share ownership is to have an impact or produce changes in YPF’s investment and exploration plans, or any other changes”.
Sacyr and Pemex say that Repsol, the 15th largest oil company in the world, is currently undervalued in financial markets, partly due to its organizational structure and development strategy. Antonio Brufau, Repsol’s CEO since 2004, has a reputation for investing heavily.
Chile rationalises: On 23 August Sigdo Koppers (SK), a Chilean company, announced that following the previous day’s sale of its white goods operation, Compañía Tecno Industrial (CTI) to Electrolux, it had purchased Magotteaux, a Belgian heavy industrial machinery manufacturer. SK’s move to sharpen its strategic focus comes at a fascinating time, and is big bet on the commodity boom continuing. Magotteaux’s business is selling mining machinery; CTI’s was selling white goods to consumers in Chile.
SK’s decision to sell its profitable home appliances manufacturing business (which also has a presence in neighbouring Argentina) to the Swedish outfit AB Electrolux for US$625m, to purchase Magotteaux (which specializes in the production of grinding and casting materials) for US$680m, is a bold move.
SK has explained that the purchase answers to its strategy of focusing on its “successful mining and industrial business by increasing its international presence and becoming a global leader in the provision of products and services for the mining and industrial businesses”.
Magotteaux has 12 production plants in 10 different countries and commercial operations in 24 states. Instead of looking to consolidate itself in its domestic and regional market, where it held a strong position, SK has opted for internationalization in a high-end niche market.
