Unjustified meddling in Deoleo deal

The Spanish government has intervened in a bid for the food oil company Deoleo, flouting laws that support open competition among bidders. If keeping Deoleo out of Italy's hands was possible initially, now there is no reason to do it.

New players are on the field as investment funds look to buy 100% of Deoleo and a 31% capital campaign implies a possible IPO. After the company is sold off, it will have to raise even more capital to restructure its debt. Pressure from Miguel Arias Cañete and Cristóbal Montoro could influence the terms of the sale and possibly cause the deal to abort. The government wants Caixabank to lead a block of Spanish investors to purchase Deoleo and increase the bank's stake by 5%. If Kutxabank, Unicaja and Dcoop (formerly Hojiblanca), BMN and Bankia join, then the 31% IPO would be unnecessary. Further, the Spanish block could get bigger if Sepi decides to purchase some shares. An intervention of this size is unjustifiable, but the state wants to get in good with Andalusia in advance of the next elections. Ministers of Agriculture and Finance have no qualms about manipulating taxpayer money if necessary in order to sell a company and make a euro.

Logically, the deal makes little sense for investment firms, and the Spanish government's involvement will make them back away from investing in our country, which is one more reason why the intervention is foolish.