Corporate conquistadores

A recent flurry of cross-border expansionism has highlighted how Spanish businesses have become a global force. Banco Santander’s takeover of Abbey National, the UK’s second-biggest mortgage lender, two years ago was Europe’s biggest cross-border banking merger to date.

by Knowledge@Wharton 22 February–7 March 2006
Last Updated: 23 Jul 2013

Then last year, for $2.4 billion Santander acquired a 20% stake in Philadelphia-based Sovereign Bank and the right to negotiate a complete takeover after two years. Telefónica has just completed its takeover of mobile phone firm O2, while at the time of writing, construction group Ferrovial was expected to bid for UK airport operator BAA.

Spain – which comprises a relatively modest 2% of global GDP – has a clutch of firms that are among the most significant in their industries in the world. As well as Santander, now among the world’s biggest 10 banks, rival BBVA is also seen as being on the big-ticket international takeover trail. Telefónica is the world’s fourth-largest telecoms firm and the biggest in Latin America, Repsol YPF is the ninth-largest oil company, while Iberdola is the world’s largest operator of wind generators.

This from a country which was strongly protectionist and that operated outside the global economy until entry into the European Union in 1986. However, since the 1980s, rapid domestic deregulation has forced companies to develop new managerial and organisational capabilities, which in turn have fuelled their growing importance in global markets. 

In the past, expansion has tended to be into Latin America, where Spanish firms have the most influence. But having taken the “low hanging fruit”, Spanish multinationals are now turning their attention to Europe and the US, with Asia also on the horizon.

The strengths they are said to bring include brands and marketing know-how, as well as a demonstrable ability to run telecommunication, energy and water infrastructures. But what could still hold them back is the abilities of their executives: Spanish firms need to develop more international managers who can operate around the world. Effective leadership will be a big challenge which not all firms will rise to. Among those tipped as having a good chance of being winners are BBVA and Santander. 

Source: The rise of Spanish multinationals: on the move in a global economy

Review by Steve Lodge

Knowledge@Wharton 22 February–7 March 2006 recommends

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