If you’re considering taking a position on this merger, there’s still time — but not for long. That said, this opportunity doesn’t come without risks. The Spanish Competition Authority (CNMC) is likely to conclude its second-phase merger review by the summer.
With the stock trading at €3.06 and two takeover offers on the table — €3.505 from Bondalti and €3.745 from Esseco — the potential margin is around €0.50 per share. But before making a decision, let’s take a closer look at the transaction and the likelihood of regulatory approval.
What are the offers?
In June 2024, Esseco Group launched an unsolicited public takeover bid for 100% of the Spanish chemical company Ercros. The initial offer was priced at €3.60 per share, implying a maximum consideration of €320 million. This was later adjusted to €3.505 per share to account for the dividend Ercros plans to distribute to its shareholders. Esseco, active in industrial chemicals, enology, and food additives, aims to strengthen its presence in Spain, particularly in basic chemical markets. Ercros, for its part, is a key Spanish player in chlorine derivatives, intermediate chemicals, and pharmaceuticals.
This bid is currently under review by both the Spanish Competition Authority (CNMC) and the Portuguese Competition Authority (AdC). In this article, we analyze the merger review process, key concerns, and the prospects for regulatory approval.
In March 2024, Bondalti Chemicals also launched an unsolicited takeover bid for Ercros, initially offering €3.84 per share, later revised to €3.745. The AdC cleared this deal unconditionally in June 2024, while the CNMC opted to open a second-phase investigation. In this article, we examine the review process in Spain and assess the chances of approval.
Antitrust Concerns
Both offers face regulatory hurdles, though approval is still possible—likely subject to concessions. However, in one of the cases, the remedies required could prove too demanding for the companies to accept.
According to the CNMC, the Bondalti/Ercros merger raises significant concerns in two key product markets: sodium hydroxide (caustic soda) and sodium hypochlorite (bleach). Together, the companies would control over 50% of the caustic soda market and up to 70% of the sodium hypochlorite market in Spain, making them the largest players on the Iberian Peninsula.
The CNMC highlighted several risks to competition: remaining competitors are relatively small and unlikely to exert sufficient pricing pressure; caustic soda imports are considered unreliable due to volatile transport costs and infrastructure constraints; barriers to entry are high, given the need for specialized plants and storage facilities; and Ercros has sufficient capacity to act as a price setter in the industry, potentially leading to higher prices for customers.
These concerns led the CNMC to open an in-depth second-phase investigation, suggesting that significant remedies will be required for approval.
Potential remedies could include divesting production capacity in Spain or Portugal, offering long-term supply agreements to competitors, ensuring third-party access to import and storage infrastructure, and introducing protections for smaller customers to prevent abuse of market power.
With Ercros, the CNMC found that the merger would lead to a highly concentrated market, with combined shares ranging from 80–90% and, in some segments, even 90–100%. Critically, there are very few alternative suppliers operating in Spain. Although a new player, DELTER, has recently started producing liquid KOH, its capacity remains modest. Nevertheless, DELTER’s presence could play a key role in helping the parties secure regulatory approval.
Despite these high levels of concentration, several important factors could help mitigate the CNMC’s concerns. This suggests the regulator may favour a mix of behavioural remedies combined with some structural measures to clear the deal.
Note to Investors
The Portuguese authority’s unconditional approval of Bondalti’s offer puts some pressure on the Spanish Competition Authority (CNMC) to follow suit. However, as the preliminary analysis has shown, market conditions in Spain differ significantly from those in Portugal. Approval in Spain is far from certain—and almost certainly won’t come without conditions.
Since the regulators opened in-depth investigations in March, Ercros’ share price has slipped, reflecting growing investor skepticism about the deal’s prospects. When Bondalti announced its bid in March 2024, Ercros’ stock climbed to around €3.50, in line with the offer. The announcement of Esseco’s higher bid pushed it further, approaching €3.75. But since then, confidence has waned, and the share price has retreated. This creates a potential margin for investors willing to take on the risk.
Whether you choose to take a position or stay on the sidelines, one thing is clear: a regulatory decision is approaching.
