With no opposition in sight, analysts anticipate success for Bondalti’s takeover bid in Spain

With Bondalti’s takeover bid for Ercros entering the final stretch and no opposition anticipated from Pedro Sánchez’s government, analysts already believe the deal could have a positive outcome, highlighting that it is good for both the Spanish giant and shareholders. If the Portuguese chemical company manages to acquire 75% of the capital, this will open the door to the creation of a “larger-scale Iberian leader” and an opportunity to scale up the business in Europe.

“The offer has been on the table since March 2024 and has now reached its final stage. With the regulatory risk largely overcome, we see a high probability that the transaction will be completed“, said Pablo Victoria Rivera, senior analyst at Lighthouse – Instituto Español de Analistas, in response to ECO. ”Given that the Council of Ministers already authorized foreign investment in June 2024, we do not expect any political or regulatory obstacles at this stage”, he adds.

Pablo Victoria Rivera emphasises that, “for Bondalti, the acquisition makes strong industrial sense: both companies operate in the chlorine and chlorine derivatives sector (sodium hypochlorite and caustic soda), and the combination would create an Iberian leader with greater scale, operational synergies and geographical complementarity between Portugal and Spain”. The senior analyst at Lighthouse – Instituto Español de Analistas notes that the shares are trading at around €3.20, which represents a discount of around 10% compared to the €3.505 per share offered. “Our base scenario is that the takeover bid will be completed at €3.5 per share in the next 3 to 6 months.”

The Spanish competition authority, the National Commission on Markets and Competition (CNMC), has approved the bid by the José de Mello Group company for Ercros, sending the case to the Spanish Ministry of Economy, which has 15 days to decide whether to send the operation to the Council of Ministers. If this does not happen, the takeover bid will go to the market regulator, the CNMV, for approval of the prospectus and publication of the offer announcement, after which the acceptance period will begin.

The commitments presented by the Portuguese company were sufficient to convince the CNMC to accept the offer, without the need to be subject to conditions imposed by the competition authority. The Portuguese chemical company committed to supplying hypochlorite to third-party manufacturers at cost price, up to a maximum of 85,000 tonnes per year. This annual supply will be based on a framework proposal approved by the CNMC, which details the basic purchase and supply conditions applicable to all buyers. This commitment will have an initial term of five years and may be extended for a maximum period of 15 years.

More than a year and a half after the announcement of the offer of €3.505 [adjusted for dividends] for 100% of Ercros’ capital in March last year, the outlook is now more encouraging for the Portuguese company. After an initial negative reaction from shareholders — a group of 150 shareholders, with around 27% of the Spanish giant’s capital, announced that they would not accept either Bondalti’s offer or that of Italy’s Esseco, which has since been withdrawn — analysts argue that the conditions offered by the Portuguese company benefit both companies and investors, paving the way for a positive outcome for the deal.

“The transaction has clear industrial logic for Bondalti and would strengthen its position in the Iberian chemical market. For Ercros shareholders, the offer provides liquidity and short-term visibility at a challenging time in the industry cycle”, the same analyst told ECO.

João Cruz, market analyst at XTB Portugal, agrees that “with no signs of political opposition, the likelihood of the takeover bid going ahead without significant obstacles is high”. “The success of the operation will depend, above all, on the support of Ercros shareholders. Bondalti has offered a generous premium (around 40%) on the company’s market value, which makes the offer attractive, especially in a context where the European chemical sector is facing challenges in terms of energy costs and reduced margins”, he argues.

For the XTB Portugal analyst, “regulatory approval and Bondalti’s good industrial reputation also ‘play’ in its favour”, highlighting that “current conditions are favourable to a positive outcome” in a deal that “appears to be a good opportunity for both parties”. For Ercros shareholders, the premium offered by Bondalti represents a “considerable increase in the value of their shares, at a time when the Spanish company has been facing worse results than investors’ expectations”.

According to João Cruz, the operation offers Bondalti “the possibility of strengthening its presence in the Iberian Peninsula, scaling up its business and diversifying its product portfolio”. “This is a strategic step that could consolidate the Portuguese company’s position as one of the main players in the European chemical sector”, he stresses, identifying several competitive advantages in the integration of Ercros.

Firstly, “the merger will significantly increase the scale of the group, allowing for a dilution of fixed costs and strengthening bargaining power with suppliers and customers (economies of scale)”, he points out. “In addition, the complementarity between the two companies’ portfolios creates opportunities to optimise production processes, eliminate overlaps and explore new markets.”

With this operation, Bondalti further strengthens its presence in the Spanish market, “thus expanding its industrial and commercial capacity in a highly competitive sector”, explains the same analyst. “In the long term, this merger could also accelerate projects related to sustainability, chemical innovation and energy transition, areas in which Bondalti has been investing consistently”, he concludes.

Paulo Monteiro Rosa, senior economist at Banco Carregosa, warns that “the CNMC’s authorisation represents a decisive step, but does not yet guarantee the immediate completion of the operation”. “The process now moves on to the Spanish government, which will certainly evaluate the operation based on criteria of general interest, and not just competition (e.g., industrial impact, security of supply, employment, or foreign investment in strategic sectors)”, he points out.

That said, Paulo Monteiro Rosa admits that, “to date, there are no signs of formal opposition from the Government” — “on the contrary, Bondalti is seen in Spain as a stable industrial investor, with a consolidated presence in the Iberian Peninsula and a positive track record in terms of sustainability and chemical innovation”, he points out. He therefore considers that “it is likely that the operation will ultimately be approved, although the administrative process may still take a few weeks until the takeover bid acceptance period opens”.

“The probability of success is high, although there are still some variables to iron out and loose ends that need to be fully resolved”, argues the senior economist at Banco Carregosa. For Paulo Monteiro Rosa, the main challenge is to reach 75%, the capital threshold set for the operation to be successful. “If small shareholders accept the proposal and the Spanish government does not raise any further objections, the takeover bid has the conditions to be successful”, he says.

“The operation allows for gains in scale in the Iberian market and strengthens Bondalti’s position in the chlorine, caustic soda and derivatives segments, where Ercros already has a significant presence”, creating industrial and logistical synergies, cost reductions and greater efficiency, summarises the economist. “In summary, this operation strengthens the competitiveness of the Iberian chemical industry and creates a solid platform for European growth.”

The chemical sector has faced major challenges, penalised by rising costs and lower demand. While Bondalti’s profits fell to €41 million last year, with EBITDA of €71 million, Ercros went from profits of €27.6 million in 2023 to losses of €12 million in 2024.

With industrial units in Estarreja (Portugal) and Cantabria (Spain) and logistics facilities in Aveiro, Barreiro (Portugal) and Vigo (Spain), Bondalti, if it succeeds in acquiring Ercros, guarantees that it will maintain the company’s headquarters in Barcelona, as well as jobs and local presence in the communities where the company operates.