Spanish M&A set to heat up as economy outstrips EU counterparts | White & Case LLP

Characterized by a resilient economy currently ahead of its major EU counterparts, Spain presents a compelling prospect for dealmakers

The Spanish economy has demonstrated remarkable solidity in recent years, pulling ahead of its peers in the EU. In 2024, the nation’s GDP grew by 3.2 percent, significantly outpacing the Eurozone average of 0.9 percent. The International Monetary Fund recently revised its 2025 growth forecast for Spain upward, to 2.5 percent, highlighting the economy’s capacity to withstand global headwinds.

Spain has proactively addressed economic challenges such as US trade tariffs with a financial package worth €14.1 billion (US$15.9 billion). To counteract tariff uncertainty, Spain has sought to forge stronger trade ties with China, while also continuing its trade negotiations with the US.

Moreover, long-term interest rates are again beginning to trend downward, reaching 3.2 percent in April 2025 compared to 3.4 percent in February.

Bull market

The Spanish M&A market saw significant growth in 2024, with 1,076 deals—the highest volume figure on record—totaling US$56.5 billion, representing increases of 16 percent and 40 percent, respectively, on the previous year.

Effective July 1, 2023, the underlying Mergermarket data supporting the M&A Explorer was consolidated with Dealogic data to produce an even more complete picture of the M&A marketplace. M&A Explorer commentary published before July 1, 2023 may reference data that does not reflect this consolidation.

For more details on the criteria behind deal inclusion, click here.

The spike in the Spanish M&A market in 2024 was built on a number of megadeals across a variety of sectors, rather than a concentration in just one industry.

While the financial services sector led the way with US$12.8 billion in deals, real estate (US$9.6 billion), consumer (US$7.2 billion) and TMT (US$6.3 billion) all delivered major contributions.

The largest deal of 2024 came in the financial services sector, with BBVA’s takeover of smaller local rival Banco Sabadell. The transaction, valued at US$11 billion, highlights the primacy of the sector and the ongoing consolidation within the European banking sector.

While the takeover, announced in April 2024, has met with opposition from the Spanish government, it was approved by the European Central Bank in September. It is currently under review by the Spanish antitrust watchdog CNMC.

The second-largest deal of 2024 saw US-based media conglomerate Liberty Media acquire motorsports entertainment service Dorna Sports for US$4 billion. The transaction highlights the attractiveness of Spanish sports and entertainment assets to international investors.

The dealmaking momentum has continued into 2025, particularly in value terms. The first quarter saw US$10.8 billion of deals, up 62 percent on the same period in 2024. However, the total came from only 141 deals, almost half the number seen in Q1 2024. This is in line with the overall trend for M&A in Western Europe.

The largest deal of the year so far saw Naturgy Energy Group initiate a share buyback, purchasing shares equivalent to 9 percent of its capital. The consideration was US$2.4 billion.

In the second-largest deal, Abu Dhabi-based Multiply Group acquired a 67.9 percent stake in Tendam, the parent company of Spanish apparel brands such as Cortefiel and Springfield, for US$1.7 billion. The deal marks Multiply Group’s first entry into the European retail sector.

Trends

A more stable macroeconomic environment and lower interest rates are expected to deliver a solid platform for M&A for the rest of 2025. Despite a more volatile global economic and geopolitical backdrop, Spanish GDP grew by 0.6 percent in the first quarter of this year, above the broader EU total of 0.3 percent.

With economic stability comes increased dealmaking. Private equity sponsors are expected to be particularly active. In 2024, Spain’s PE activity accounted for 264 deals, up from 251 in 2023, with a cumulative value of US$21.8 billion, up from US$16.8 billion the year before.

The largest sponsor-related deal of the year saw Cinven acquire a 70 percent stake in Spanish online real estate marketplace Idealista. The deal facilitated a partial exit for previous investors while allowing management and a remaining stake for EQT, indicating continued confidence in Idealista’s growth potential in the TMT sector.

In line with overall M&A trends in the first three months of 2025, deal value has remained stable while volume has slipped back. The value of PE activity for the first quarter stands at US$3.1 billion—almost identical to the total in Q1 2024—while volume (incorporating exits, buyouts and secondaries) slipped from 54 deals last year to 41 in Q1 2025.

However, narrowing valuation gaps, attractive assets and Spain’s position as the second-fastest-growing tech startup market in Europe mean that sponsors are likely to return to the deal table in the latter half of the year, as the global economic picture becomes clearer.

Opportunities

Meanwhile, for companies and PE alike, several sectors present significant opportunities in the Spanish M&A market.

In the technology and digital infrastructure sector, increasing demand for data centers, AI-related technologies and digital services will drive further transactions. Deals in 2025 include Sensia, an AI-powered infrared imaging business serving the energy sector, securing a US$19.8 million strategic investment from A&G Energy Transition Tech Fund and SETT—also known as Sociedad Española para la Transformación Tecnológica.

In the renewable energy industry, Spain’s commitment to the energy transition continues to drive deals in solar, wind and related infrastructure. In the wake of Spain’s nationwide blackout in April, and with 70 percent of generation output already powered by solar and wind, significant grid investment is now earmarked for 2025. Grid operator Red Electrica invested €1.1 billion (US$1.2 billion) in 2024 and plans to spend €1.4 billion (US $1.6 billion) in 2025.

The banking sector is also likely to see a wealth of deals as European banks cope with a lower net interest margin environment and move toward higher levels of consolidation. Meanwhile, in the wider financial services industry, more transactions are likely to transpire as companies look to achieve economies of scale, expand market share and enhance operational efficiencies.

In addition, the consumer industry, and the tourism subsector in particular—which the World Travel & Tourism Council forecasts could reach a new all-time high in Spain in 2025—is also on the radar of sponsors and strategic buyers, respectively.

Not all plain sailing

Despite the optimistic outlook, challenges persist. While Spain’s economy is robust, global economic headwinds and unforeseen domestic events could introduce uncertainty for dealmakers.

In addition, evolving domestic and EU regulations require careful navigation, as demonstrated by the extended review of Liberty Media’s acquisition of Dorna Sports, which was ultimately approved in April 2025.

And while government policies and regulations promoting renewable energy projects, including Spain’s first auction for offshore wind energy planned for 2025, will likely spur dealmaking, uncertainties regarding the specific criteria for these auctions. The indexing of guaranteed remuneration, for example, could influence investor decisions, as seen in mature offshore wind markets such as the UK.

Discussions about potential tax and regulatory changes affecting large energy companies and electricity markets also warrant attention, as they have in other parts of Europe, particularly around windfall taxes. Disputes over renewable energy and nuclear plant closures are likely to cause continued litigation in the energy sector in 2025.

In addition, foreign direct investment screening has increased scrutiny of certain foreign investments since 2020, with a recent extension of the FDI regime for EU and EFTA-based investors until December 31, 2026, for investments exceeding €500 million (US$567 million).

Outlook

But for now, dealmaking prospects remain positive. Lower interest rates in the latter half of 2025 could improve financing conditions and spur further activity. Companies are increasingly focusing on strategic acquisitions to drive growth, digital transformation and sustainability agendas, while PE firms need to deploy near-record levels of dry powder and realize investments.

Overall, Spain’s robust economic fundamentals provide a solid foundation for dealmaking, particularly in sectors driven by innovation and sustainability. While the first quarter of 2025 showed a slight adjustment in deal volume, significant value continues to be transacted across a wide variety of sectors, driven by strategic rationales and the underlying resilience of the Spanish economy.

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