SPAIN Trends and Developments Contributed by: Ignacio Sanjurjo, Ignacio Echenagusia, Alejandro Espín and Román Cantín, Deloitte Abogados y Asesores Tributarios, S.L.U.
• financing Spanish companies in amounts equal to or exceeding EUR1 million; and • acquisitions of real estate in Spain with a value exceeding EUR500,000. The new regulation introduces an obligation to report foreign investments in Spain to the Investment Reg - istry of the Ministry of Industry, Trade and Tourism, with the purpose of ensuring proper monitoring and oversight of such transactions (in addition to the cases mentioned above, in which prior authorisation is man - datory). Furthermore, the decree specifies that foreign invest - ments in Spain formalised before a Spanish notary will be reported directly by the notary, thereby exempting non-resident investors from the obligation to file the report themselves. In summary, the Royal Decree seeks to establish a more streamlined and transparent system for foreign investment, fostering economic development while safeguarding national interests and security in strate - gically sensitive sectors. EU Foreign Subsidies Regulations Regulation (EU) 2022/2560 on foreign subsidies dis - torting the internal market (the “Foreign Subsidies Regulation”; FSR) was approved on 23 December 2022, granting authority to the European Commis - sion to investigate financial support provided by non- EU countries to companies operating within the EU, where such subsidies could distort competition. The FSR has been progressively implemented and, as of 12 October 2023, certain transactions – such as mergers and public procurement procedures that meet defined thresholds – are subject to mandatory notification and prior approval of the Commission. These include cases where the target company, merg - ing entity or joint venture has an aggregate EU turno - ver of at least EUR00 million, and where the foreign financial contribution exceeds EUR50 million. This regulation has broad implications across multiple sectors and requires companies to carry out detailed due diligence on foreign financial support in order
to ensure compliance and avoid delays in executing transactions. M&A Trends As examined in the following sections, new trends have emerged (or previous trends have been strength - ened) due to the increased cost of financing, infla - tion and geopolitical uncertainty – mainly caused by the Ukraine-Russia and Gaza-Israel conflicts, as well as the agreement reached by the EU and the USA whereby European exports to the latter will be subject to a tariff of 15%, while US products will enter the European market without paying tariffs; this could lead to an increase in distrust in European markets. Bilateral sale processes More than half of the PE transactions executed in 2021 were structured as auctions with tight dead - lines. However, this trend shifted significantly from 2022 onwards. With the exception of a slight rebound in 2023, the number of PE transactions conducted through auction processes has continued to decline, reflecting a clear preference for bilateral negotiations, in particular when a PE fund acts as buyer, seeking a higher level of certainty, control and negotiating power compared to competitive processes involving multiple bidders. Conditions precedent The current regulatory framework on foreign invest - ments in Spain has led to the frequent inclusion of regulatory conditions precedent in PE transactions, particularly the obligation to obtain approvals on mat - ters such as antitrust clearance, FDI and foreign sub - sidies. In this regard, most transactions involving interna - tional parties require a preliminary analysis to assess whether such regulatory requirements are necessary. Indicators such as a PE fund’s profile or the target company’s activity in a strategic sector may suggest the need to conduct this assessment. According to a report published by the Ministry of Industry, Consumption and Tourism of the Spanish government, a total of 167 transactions were submit - ted for prior authorisation during 2024, which rep - resents a 29% increase relative to 2023. Of these
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