Sacyr Jumps on Possible Repsol Stake Sale to Lukoil

By Gianluca Baratti and Stephen Bierman

Nov. 20 (Bloomberg) -- Sacyr Vallehermoso SA, Spain's worst-performing stock this year, jumped the most in two years in Madrid trading on reports the builder will sell its 20 percent stake in Repsol YPF SA to OAO Lukoil.

Sacyr, which said last week it was in talks over the possible sale of the stake, rose as much as 14 percent after EFE newswire identified Lukoil as a possible bidder. Repsol, Spain's biggest oil producer, advanced 3.9 percent while Lukoil fell 11 percent in Moscow.

Lukoil may buy an additional 9.9 percent of Repsol shares on the open market, EFE reported yesterday, citing unidentified people. Russia's biggest non-state oil producer would be required to make an offer for the whole company if it bought more than 30 percent, EFE said.

``Lukoil's fastest way to get into Repsol is to agree on the stake at the market price,'' Steven Fernandez, a Paris-based industrial analyst at Exane BNP Paribas said in a telephone interview today. ``Otherwise it could just build its stake at a discount in the market.''

The overall stake would be worth 5.1 billion euros ($6.4 billion) based on Repsol's market value of 17 billion euros as of yesterday.

Lukoil spokesman Dmitry Dolgov declined to comment when contacted by Bloomberg. Nobody from Repsol was available for comment. Sacyr has no comment to make beyond last week's regulatory filing when it said it had held talks with possible buyers, Ana de Pro, managing director for corporate development, said in a telephone interview today.

`Independent'

The Spanish government will do all it can to ensure Repsol remains ``independent and Spanish,'' Industry Minister Miguel Sebastian was cited today as saying by Efe.

Separately, Europa Press reported that Lukoil may pay 9 billion euros for Sacyr's Repsol holding and a stake owned by Criteria Caixacorp SA, a Spanish investment company.

Criteria hasn't received a ``concrete offer'' for its 9.1 percent interest in Repsol, the Barcelona-based company said today in a regulatory filing, without identifying any counterparties.

Sacyr spent 6.5 billion euros on the Repsol holding in 2006, paying an average of 26.71 euros a share. It may be under pressure from creditor banks to guarantee its debt, said Fernandez at Exane BNP.

``The only way to remove this debt would be to sell the Repsol stake, but the price is critical,'' he said. ``If 9 billion euros was the case, they would take it.''

Dividend Payments

Collateral, in the form of shares of Sacyr's Testa real estate subsidiary, is linked to the price of Repsol. If Repsol shares drop, the amount of collateral increases. Even so, selling its stake would deprive Sacyr of dividend payments from Repsol.

``Sacyr would rather sell Itinere before its stake in Repsol,'' Jose Lizan, a fund manager at Inversiones SV in Madrid, said in an interview with Bloomberg Television, referring to Itinere Infraestructuras SA, its toll road unit.

In June, Lukoil agreed to pay Italy's ERG SpA 1.35 billion euros for 49 percent in a new venture that will control the 320,000 barrel-a-day Isab refinery, storage tanks, and a 99- megawatt power plant in Priolo, Sicily. It also has refineries in Bulgaria and Romania.

Repsol operates five refineries in Spain, three in Argentina and one in Peru. It has holdings in another refinery in Argentina and two in Brazil, giving the company a total refining capacity of 1.23 million barrels a day, according to the Madrid-based company's Web site.

Gazprom, Total

OAO Gazprom, Russia's natural-gas exporter, said Nov. 14 that it's not interested in the Repsol stake.

The Spanish government wouldn't stand in the way of a Lukoil bid for 29.9 percent of Repsol, Cinco Dias reported today. The administration would prefer Lukoil, rather than Total SA of France, purchases the stake, the Spanish newspaper said, without saying how it got the information.

Sacyr was 50 cents, or 7.7 percent, higher at 7 euros as of 1:37 p.m. local time. The stock is down 72 percent this year. Repsol increased 1.8 percent to 14.20 euros. Lukoil slid 7.8 percent to 766 rubles on the Micex Stock Exchange.

To contact the reporter on this story: Gianluca Baratti in Madrid gbaratti@bloomberg.net.