Incorporated: 1931 as Entrecanales y Tavora
NAIC: 236210 Industrial Building Construction; 236220 Commercial and Institutional Building Construction; 237110 Water and Sewer Line and Related Structures Construction; 237310 Highway, Street, and Bridge Construction; 237990 Other Heavy and Civil Engineering Construction; 238110 Poured Concrete Foundation and Structure Contractors; 238210 Electrical Contractors; 312130 Wineries; 333611 Turbine and Turbine Generator Set Unit Manufacturing; 488119 Other Airport Operations; 524210 Insurance Agencies and Brokerages; 531210 Offices of Real Estate Agents and Brokers; 541330 Engineering Services
SIC: 1541 Industrial Buildings & Warehouses; 1542 Nonresidential Construction Nec; 1623 Water, Sewer & Utility Lines; 1781 Water Well Drilling; 1611 Highway & Street Construction; 1622 Bridge, Tunnel & Elevated Highway; 1629 Heavy Construction Nec; 1771 Concrete Work; 1731 Electrical Work; 2084 Wines, Brandy & Brandy Spirits; 3511 Turbines & Turbine Generator Sets; 4581 Airports, Flying Fields & Services; 6411 Insurance Agents, Brokers & Service; 6531 Real Estate Agents & Managers; 8711 Engineering Services
Acciona S.A. has transformed itself from a focused construction and infrastructure group to a diversified company with three primary sectors: Infrastructure, Energy, and Services. Acciona Infraestructuras represents the company's historical base and includes the group's construction and engineering operations, as well as its transport concessions, including toll road operations. This division is also the group's largest division, accounting for more than half of its total revenues, and includes Acciona Real Estate, which oversees the company's portfolio of properties and real estate development operations. Acciona Energy is active in the development, construction, and operation of power generation facilities, with a specific focus on renewable energy sources. These include the operation and maintenance of hydroelectric dams, but especially the development and operation of wind farms. Acciona is one of the world's leading wind farm groups. In the mid-2000s, Acciona has been expanding its wind farm operations on an international scale, bidding for control of Pacific Hydro in Australia in 2005, launching wind farm operations in Slovenia in 2006, and forming a joint venture in Nantong, China, to construct the world's largest wind turbine factory. Acciona Energy represents a small but fast-growing part of the overall group. Between 2004 and 2005, that division nearly doubled its total revenues, to more than EUR 500 million. Acciona Services combines the group's operations in logistics and airport services, concessions (including car parks, hospital facilities, and funeral services), and waste management and other urban and environmental services. This division also includes Acciona Trasmediterránea, the former state-owned ferry services operator. Together, Acciona's operations combined to generate revenues of more than EUR 4.8 billion ($6.2 billion) in 2005. The company is listed on the Madrid Stock Exchange and is led by Chairman Jose Manuel Entrecanales Domecq. The Entrecanales family is also the company's major shareholder.
Merging a Major in 1997
Although Acciona was formed only in 1997, through the merger of Entrecanales y Tavora and Cubiertas y MZOV, its operations dated back to the beginning of Spain's modern construction and engineering industry. The oldest part of the group was MZOV, which dated its origins back to 1862. Other members of the group were developed in the early years of the 20th century. Such was the case of Cubiertas, founded as Cubiertas y Tejados in 1916. Those two companies merged in 1978 to form Cubiertas y MZOV.
Cubiertas y MZOV grew strongly through the 1980s, benefiting from the huge boom in construction in Spain as the country emerged from the long years under the Franco dictatorship, and then joined the European Union. Spain quickly became one of the most dynamic economies in Europe, enjoying steady growth through the 1990s. The Spanish government played a prominent role in the development of the country's construction and engineering sector, launching a long series of large-scale infrastructure projects. The company also entered the property development sector during this period, buying up a number of residential property holdings, located in most of Spain's major cities, in 1987.
As spending slowed during the difficult economic period at the beginning of the 1990s, however, the highly fragmented Spanish construction and engineering sector came under increasing pressure. Cubiertas y MZOV responded by embarking on a diversification strategy in the early 1990s, targeting several new sectors, including property development; waste management and water treatment; services, including security, maintenance and cleaning, and documentation and mail services; and gardening.
As part of this effort, Cubiertas y MZOV made a number of acquisitions, including the purchase of a 45 percent stake in Ingeniera Urbana, boosting its waste management and waste services arm, and Rendos S.A. Both companies were acquired in 1990. The company also continued to acquire property, as well as a number of car park concessions. By 1993 the company operated six car parks. In the meantime, Cubiertas y MZOV also had found a majority shareholder, in the form of rival construction and engineering group Entrecanales, which bought into the company at the end of the 1980s. Through the next decade, the two companies began collaborating on a number of joint ventures and investments.
The two companies moved to cement their relationship at the end of 1996, announcing their decision to merge. That merger was carried out at the beginning of 1997, at which point the company took on the name of NECSO Entrecanales Cubiertas S.A. Yet Entrecanales, and the Entrecanales family, were clearly the controlling force behind the newly enlarged company.
Entrecanales had entered the construction market in 1931 under the leadership of patriarch José Entrecanales Ibarra, a road engineer, and partner Manuel Tavora, who founded the company Entrecanales y Tavora. The company's fortunes took off especially following the end of the Spanish Civil War in 1939. Over the next decades, Entrecanales y Tavora emerged as one of Spain's leading infrastructure groups. The company, which became fully controlled by the Entrecanales family after Tavora died in 1940, also became one of the first Spanish construction groups to launch operations on an international scale.
The second generation of the family took over the direction of the business in 1970, through Jose Maria Entrecanales, and led it through a first consolidation wave in the Spanish market. As such, the company emerged as one of several large-scale Spanish construction companies. Entrecanales also participated in a number of high-profile projects in the 1970s and through the end of the century. Projects during this period included the construction of the Ascuncion Bridge in Paraguay, begun in 1976 and completed in 1979. The company returned to that country in 1983, building the Concepcion Bridge, which was completed in 1986. Back in Spain, the company launched construction of the Tortosa Bridge, in Tarragona, completed in 1988.
Into the 1990s, Entrecanales served as a major partner in the construction of Spain's high-speed train system. As part of that project, the company completed a series of viaducts, including those at Churreteles, Concejo, Cortaceros, Parrilla, Valle, and Vinuela. Entrecanales also increasingly sought business on the international front; in the mid-1990s, for example, the company entered the Asian market, building the Ting Kau Bridge connecting Hong Kong to the Chinese mainland. Begun in 1995, that project was completed by 1998.
New Energy Focus in the New Century
Into the late 1990s the Spanish construction sector entered a new period of consolidation, with major players, including Dragados, FCC, and others jockeying for position at the top of the market. The newly created NECSO took its place among the market leaders and launched a new growth period that saw the company's sales nearly double by the middle of the next decade. Soon after, the company changed its name to Acciona S.A.
In preparation for its next growth phase, the company launched a restructuring effort for its more than 100 subsidiaries. As part of that effort, the company also targeted new areas for its expansion. As such, the company's operations were regrouped into three primary divisions. Most of the company's existing operations were placed under the Infrastructure division, led by NECSO, which functioned as the holding company for the construction, engineering, infrastructure, and concessions operations, as well as real estate, urban services, and environmental and energy services. The second division, Logistics and Airport Services, represented the company's new focus on these markets, which included airport handling and management services, but also newly developing distribution and logistics operations. As a starting point for this business, the company acquired Press Cargo in 1999. The company's third division became Telecommunications, and represented the company's investments into the early 2000s in Spain's mobile telephone sector. These included stakes in businesses such as Airtel, Bilbao Editorial, Ecuality, and Radiotrónica-Telson.
The company also targeted further expansion internationally, notably in Poland, which expected to enter the European Union before the middle of the 2000s. The company entered that market in 1999 with the acquisition of a 24 percent share in Mostostal Warszawa. That company was among the leaders of the Polish infrastructure market, and was particularly strong in the construction of bridges. Acciona subsequently raised its stake in that company to 49 percent in 2001. At the same time, Acciona added a stake in Elektrim Finance, a leader in the Polish telecommunications market.
In 2000, Acciona reached an agreement to transfer its stake in Airtel to European cellular phone giant Vodafone. As a result, Airtel became Vodafone Espana, and Acciona became a prominent stakeholder both in that company and its parent. In 2003, Acciona cashed in part of its stake, raising more than EUR 2 billion.
The cash helped fueled the company's ongoing transformation. The company had beefed up its services operations with the 2001 acquisition of a major stake in Inversiones Tecnicas Urbanas S.L., the leading provider of funeral services in Spain. That company then acquired majority stakes in the Spanish and Portuguese operations of Service Corporation International. In 2002, Acciona won its bid to take over Trasmediterránea, Spain's leading ferry boat and shipping transport operator. That acquisition was completed in 2003.
At the same time, Acciona had developed a new target for its expansion, that of renewable energy production. In 2003, the company paid EUR 383 million to acquire a 50 percent stake in Corporacion Energia Hidroelectrica de Navarra (EHN), a major wind farm operator. As part of that deal, Acciona agreed to transfer its own wind farm holdings to EHN, which then became the world's number three wind power generator. Acciona continued to increase its shareholding in EHN, taking full control by 2004.
Jose Manuel Entrecanales Domecq took over direction of the company from his father in 2004. The younger Entrecanales promised to expand the group's renewable energy interests further, as the company adopted a new sustainability platform to underscore its operations. At the same time, Acciona made an effort toward consolidation within the infrastructure sector, acquiring a 15 percent stake in rival Fomento de Construcciones y Contratas (FCC), with a view toward an eventual merger. By mid-decade, however, such a merger appeared unlikely.
Instead, Acciona continued building up its renewable energy holdings. In 2005, the company posted a winning bid for Pacific Hydro, based in Australia, and a leader in that country's renewable energy market. By then, the company had launched construction of a new wind farm in Alberta, Canada, backed by a EUR 41 million investment. In 2005, the company completed two new wind farms in Germany, and another in France. The company's renewable energy competence also extended to include biodiesel and, with the launch of construction of Nevada Solar in 2005, solar thermoelectric energy.
By 2006, Acciona had emerged as a world leader in wind turbine technology. This position was cemented by the launch of a joint venture with China Aerospace and Technology Corporation, owned by the Chinese government, to launch construction of wind generators using Acciona's technology for the Chinese market. The growth of the company's energy operations, as well as its services component, led it to restructure its business again, regrouping its holding under three core divisions. With more than EUR 4.8 billion ($6.2 billion) in sales, Acciona had become a prominent actor on the international stage.
Principal Subsidiaries
Acciona Airport Services, S.A.; Acciona Biocombustibles, S.A.; Acciona Concesiones, S.L.; Acciona Do Brasil, Ltda.; Acciona Energía, S.A.; Acciona Eólica de Galicia, S.A.; Acciona Infraestructuras, S.A.; Acciona Inmobiliaria, S.L.; Acciona Logística, S.A.; Acciona Serv. Hospitalarios, S.L.; Acciona Servicios Concesionales, S.L.; Acciona Servicios Urbanos y MA, S.L.; Acciona Servicios Urbanos, S.A.; Acciona Wind Power, S.A.; Press Cargo, S.A.; Trasmediterránea Cargo, S.A.
Principal Competitors
ACS Actividades de Construccion y Servicios S.A.; Mondragon Corporacion Cooperativa; Fomento de Construcciones y Contratas S.A.; Sacyr Vallehermoso S.A.; Ferrovial Agroman S.A.; Obrascon Huarte Lain S.A.; Grupo Isolux-Corsan S.A.; Constructora San Jose S.A.
Further Reading
"Acciona Acquires Half of EHN Stake," Power Engineering International, September 2003, p. 17.
"Acciona Lines Up Trasmediterranea Ferries," Lloyd's List, June 15, 2006.
"Acciona May Consider Further Acquisitions," Expansion, August 20, 2002.
Fortson, Danny, "Spanish Construction Merger Builds," Daily Deal, April 28, 2004.
Kohler, Alan, "These Crazy Spaniards at Acciona Must Have Got a Whiff That There's Something in the Wind," The Age, March 29, 2005.
"Thames to Sell Spanish Arm for £104 Million," Utility Week, March 24, 2006.
White, David, and Andrew Taylor, "Spanish Builders to Merge," Financial Times, November 8, 1996, p. 24.
Yeh, Andrew, "Acciona in Joint Energy Deal," Financial Times, June 28, 2006, p. 13.
— M. L. Cohen
