Iberia Shares Tumble after TPG Bid Withdrawal

Shares in airline Iberia fell Tuesday after a group led by U.S. private equity firm TPG announced that it was withdrawing its 3.41 billion euros ($5.07 billion) bid for Spain's flagship carrier.

The company's shares fell 4.5 percent to 3 euros ($4.45) in Madrid trading.

Iberia said Monday that TGP was withdrawing its offer after a key shareholder in the airline, Spanish savings bank Caja Madrid, disrupted the bidding with plans to raise its stake.

Caja Madrid said last week it wanted to raise its stake from 10 percent to 23 percent, after key group partner British Airways said it would not exercise its right to acquire more shares in Iberia from core shareholders Banco Bilbao Vizcaya Argentaria and cigarette distributor Compania de Distribucion Integral Logista.

Caja Madrid said it would seek the new shares from the two other shareholders at a price of 3.60 euros ($5.30) per share -- the same price the TPG group proposed in its non-binding offer filed in March.

The TPG group said in a letter to Iberia that Caja Madrid's action made any offer impossible under friendly terms, a key condition of its bidding plan. The group included British Airways and local private equity firms Inversiones Ibersuizas, Quercus Equity and Vista Capital de Expansion.

Caja Madrid, Spain's fourth-largest financial services company by assets, said its move was aimed at eliminating the uncertainty surrounding Iberia after two groups approached the company but failed to put a binding offer on the table.

Earlier this month, another group of investors led by Spanish private equity firm Gala Capital approached Iberia with an indicative offer that valued the carrier at up to 3.76 billion euros ($5.59 billion). A Gala spokesman said its non-binding bid for Iberia remained in place.

Iberia is a key company for the Madrid local government -- which controls Caja Madrid -- as the recently expanded Barajas airport has generated around 170,000 jobs in and around Spain's capital.