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Colonial Valued at Nearly $4B in Takeover Bid

MADRID-Inmocaral has registered with the Madrid Stock Exchange for a takeover offer for Colonial. The merged company will have a market cap of about $8.8 billion.

By Anita Howarth | Updated on June 14, 2006

MADRID-A Spanish property minnow has launched a move to swallow its much bigger rival, Colonial, in a move that is expected to create Spain’s second largest property company. La Caixa, Spain’s largest savings bank, has already agreed to sell its 39.4% stake to Inmorcaral, which is headed by Spanish entrepreneur Luis Manuel Portillo. He is also planning a rights issue for Inmocaral, the construction group in which he is a majority shareholder. Last year, he surprised the market when he launched a takeover bid for 100% of Inmocaral for euro 252 million ($316 million). He was able to secure 72.4% of the shares.

In December, he resigned from the board of Spain’s largest property developer, Metrovacesa, because of a possible conflict of interest that would arise from his presence on the boards of both Inmocaral and Metrovacesa. The little-known Inmocaral plans a complex, three-part capital increase to help finance the deal, which will include a tender offer, at the same price, to all shareholders. The resulting company will have market capitalization of about euros 7 billion ($8.8 billion), making it Spain’s second biggest listed property business after Metrovacesa.

Colonial also has a presence in France. Two years ago it paid euros 1.5 billion ($1.9 billion) for control of Societe Fonciere Lyonnaise, a listed property fund specializing in commercial rental stock in Paris.

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