ACS's presence in Iberdrola is taking a toll on the former, which is led by Spanish businessman Florentino Pérez. Iberdrola's falling stock price has forced ACS to put up larger guarantees to back its shares in Iberdrola, because the construction company guaranteed its purchase of Iberdrola stock with some of its own shares.
ACS debt tied to Iberdrola, which is valued at more than 4.9 billion euros, comprises more than 18.5% of the company's capital. Further, ACS's market capitalization is only 5.5 billion euros.
Added to this risk exposure, ACS is faced with slowing business in the construction industry and exposure to public sector contracting during a year of major government cutbacks.
ACS's decision to purchase shares of Iberdrola is going to reduce its net profits in 2012, which will be a big price to pay.