ICD's bid to acquire Spanish firm fails

Dubai: Investment Corporation of Dubai (ICD) said on Thursday it regretted that some of the conditions it had agreed for its partial takeover offer for Spanish property group Inmobiliaria Colonial SA could not be met.

ICD, an investment arm of the Dubai government, had made a 3 billion euro offer last week to acquire the rental business of Colonial for 1.19 euros per share, subject to a number of conditions that needed to be met by March 19.

It could not reach an agreement with Colonial's creditors to conclude the acquisition.

The board of directors of Colonial had voted on March 18 to immediately carry out the necessary actions to adopt the relevant resolutions in the context of the transaction as proposed. "We regret that despite best efforts by all parties no agreement could be found," said Mohammad Al Shaibani, chief executive officer and executive director of ICD.

ICD, however, left a door open to future negotiations after the bid collapsed.

"If there was a possibility, beyond the conditions set on March 11, to reach an agreement with Colonial, ICD would consider such a possibility and would communicate it immediately," the fund said to Spain's stock market regulator.

But Colonial's shareholders, Luis Portillo and the Nozaleda family, also in a statement to the regulator, sounded a more pessimis-tic note.

They said ICD had not reached a deal with the creditors "[and] no expectation exists that such an agreement will be reached." They added that they continue to search for a "satisfactory solution" for Colonial and its shareholders.

Colonial shares opened 23.5 per cent lower at 0.78 euros yesterday but were soon taken back into auction as the bourse tried to match trades.

Colonial shares were stuck in pre-auction for most of the morning as sellers far outstripped buyers until the trading range was widened to 25 per cent. Dubai's $82 billion holding company leaves behind it a week of frantic negotiations in Madrid, London and Dubai. An agreement was difficult as it involved multiple parties, including as many as three groups of creditors, sources familiar with the situation said.

Colonial has a 7.2 billion euro-syndicated loan with Goldman Sachs, Eurohypo, Calyon and Royal Bank of Scotland (RBS).

Talks between the two sides have collided over ICD's demands of an improvement of the terms of the loan, which the banks rejected, people familiar with the situation said.

However, the banks were increasingly in favour of a deal as an alternative sale of assets became less attractive given global credit woes.

The deal was also pending a further agreement between another group of banks, and some Spanish savings banks, that lent former Chairman Portillo and the Nozaleda family the cash to fund their purchase of Colonial shares.

A third set of banks, comprising lenders to the company itself, were also involved in the talks.

- With inputs from Reuters