Saudi Telecom Co. is planning a $2.5 billion acquisition of a 9.9% stake in Telefonica (NYSE:TEF) SA, a move that has sparked controversy in Spain due to the potential terms that the Spanish government may impose on the deal. The terms could be similar to those enforced on IFM Global Infrastructure's acquisition of Naturgy Energy Group SA, including restrictions on asset sales and dividends. This is in accordance with Spain's 10% stake rule for strategically important firms like Telefonica and Indra Sistemas SA.
The planned acquisition follows the pattern of previous investments by government-backed Gulf companies in European telecoms. A notable example is when Emirates Telecommunications Group became Vodafone Group (LON:VOD) Plc’s largest shareholder. However, despite the controversy surrounding the deal, the Spanish government remains uninformed about it as confirmed by Economy Minister Nadia Calvino on Tuesday.
The deal forms part of a broader business relationship between Spain and Saudi Arabia, which includes contracts for high-speed trains to Mecca and warships. The unfolding situation around the acquisition underscores the complex dynamics at play as Gulf companies continue to invest heavily in European firms, navigating national regulations and strategic considerations.
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