Metrovacesa ups financial forecast despite turf war

Metrovacesa has revised its full-year 2006 net profit forecast upwards to EUR 1.1 bn despite the ongoing boardroom battle for control of the Spain's largest property group. Metrovacesa had early revised its forecast from EUR 690 mln to EUR 880 mln. The latest forecast came as it reported a 176.4% increase in net profit for the nine months to September.

Meanwhile, the battle for the control of the company continues. Metrovacesa said on Wednesday it had voted to remove Roman Sanahuja from its executive committee, leaving the Sanahuja family with only three, non-executive representatives on the company's board.

Spanish property groups have been engaging in bitter, and in some cases less painful, takeover bids in recent months in which smaller companies have been eaten up to form bigger entities. It has been a kind of survival of the fittest. The principle players have been Metrovacesa, Urbis, Construcciones Reyal, Parquesol and Grupo San José. The common factor, say market watchers, is the simple need for growth.

'The principal reason for the recent spate of takeovers and amalgamations has been the need for one company or another to expand’, Alberto Ortín, a construction specialist with the Spanish business daily Cinco Dias told PropertyEU. 'The only way they can do this and maintain a significant presence on the stock exchange is by taking over rival companies or smaller ones.' Property prices in Spain are rising for the seventh successive year, encouraging investors to snap up property companies and make the most of the trend. The takeover battles are also the fruit of this desire to cash in while Spain’s building bubble refuses to burst, said Ortín. At the same time, analysts are persistently predicting a slowdown in the overall market.

In the case of Metrovacesa, a bitter battle has been underway since March between two opposing fractions. Metrovacesa chairman Joaquim Rivero and his partner, the football-club owning tycoon, Juan Bautista Soler, have been fighting a rival bid by Metrovecesa’s largest shareholder, Cresa. This property company is owned by Spain’s Sanahuja family. As each side has been bidding more for the same company, shareholders have been rubbing their hands in glee as share prices continued to rise further. The Sanahuja family owns 39% of the company and Rivero and Soler own 36%. Three banks own 10.2%, leaving no-one with overall control.