Ashby's Answers: The pain in Spain

ASHBY'S ANSWERS

Just a few years ago Spanish companies were the envy of Europe, taking advantage of cheap and plentiful capital (and tax breaks on acquired goodwill) to snap up well-known businesses in the UK.

For example, Telefonica bought mobile telephone operator O2 in 2005, a short period after the business was spun out from BT. Ferrovial then acquired airport operator BAA and Iberdrola bought Scottish Power, both in 2006. In addition, the UK government was extremely grateful that Santander was in a strong enough position during the credit crunch to pick up the pieces from the demise of both Alliance & Leicester and Bradford & Bingley. Fast forward to the present day and it is clear that the bubble has burst. Ferrovial was forced to inject a further £500m in equity into BAA in late 2009...