Introduction
The news of Iberdrola’s departure from Mexico, following reports that Barclays was advising the Spanish company on the sale of 15 power plants, has been making headlines. The announcement surprised many, including employees, who had heard rumors that Katya Somohano’s appointment as CEO of Mexico was a strategy to facilitate the sale of remaining plants to CFE. However, things took an unexpected turn when COX announced a binding offer for the acquisition, reportedly valued at $4.7 billion according to unofficial sources.
Background on COX
Before 2020, COX was virtually unknown in the energy sector. They struggled to gain traction and even sought bankers for a listing, only to be rejected due to their lack of value. Eventually, they managed to list on the BIVA exchange in July 2020, raising $25 million – a modest amount for the energy sector. Despite this, COX persisted and managed to secure a significant acquisition five years later.
COX’s Strategic Partnerships
Enrique Riquelme, CEO of COX, formed strategic partnerships with former acquaintances in the Mexican energy sector – the Spanish Group Abengoa. Although Abengoa had a tumultuous history in Mexico, including a debt of nearly €27.356 billion in November 2015 and eventual bankruptcy in February 2021, COX managed to leverage these connections and optimism to achieve their current position.
The Iberdrola Sale
Iberdrola’s decision to sell its assets in Mexico, valued at $4.17 billion, was confirmed through a Sale and Purchase Agreement (SPA) with COX. This agreement, though not new to COX and Iberdrola since February 2021, only became public this week. The suddenness and secrecy surrounding the sale have left many in the sector surprised, particularly regarding COX as the buyer.
Implications for Iberdrola Employees
With the sale, the fate of approximately 500 Iberdrola Mexico employees remains uncertain. It is logical to assume that COX may acquire not just the assets but also the entire workforce, including both operational and executive staff. Given COX’s limited presence in Mexico with only a handful of employees, retaining the current Iberdrola team seems like the most sensible course of action.
Key Questions and Answers
- How could a company without significant revenue list on the stock exchange? COX managed this through public relations and optimism, forming strategic partnerships with experienced players like Abengoa.
- How did COX secure a $4.7 billion acquisition after years of limited success? Through determination, strategic partnerships, and persistence in the face of initial rejection from bankers.
- What will happen to Iberdrola’s employees in Mexico? COX is likely to acquire the entire Iberdrola workforce, given their limited presence in Mexico.
