NEW YORK (The Deal) -- Spain's Repsol effectively ended its 15-year association with YPF (YPF) on Wednesday, May 7 when it sold an 11.86% stake in the Argentine oil and gas producer for $1.26 billion, raising funds for a planned $10 billion acquisition spree.
Repsol said in a stock market filing that it sold the stake to Morgan Stanley & Co. LLC, netting a $622 million profit on the deal and leaving it with a holding of less than 0.5% in YPF. Repsol is unable to sell the remaining stake as it is the subject of legal proceedings.
The "widely expected sell down by Repsol provides it cash for acquisitions and [is] positive for YPF as this [share] overhang is now removed," wrote analysts at Tudor Pickering Holt & Co. Repsol sold the stake, which was held in the form of American security deposits, for $26.91 per share, a 4.5% discount to Tuesday's close of $28.18, according to the note.
The sale comes two months after Repsol accepted Argentine bonds with a face value of $6 billion in compensation for a 51% stake in YPF, which was repatriated in May 2012. That payment is due to be made in dollar denominated bonds, maturing between 2017 and 2033, which Repsol will be free to sell at any time for a maximum of $5 billion. The bonds will pay about $500 million a year in interest.
Repsol's executive Chairman Antonio Brufau has said he plans to spend as much as $10 billion on oil and gas producing assets in OECD countries to offset production lost along with Repsol's stake in YPF. Analysts have tipped North America, the U.K. and Norway as the most likely destinations for Repsol's investment.