Repsol shares fell by 6 percent yesterday in response to Monday's announcement that Argentine President Cristina Fernández de Kirchner intends to nationalize YPF SA, Argentina’s biggest oil and gas producer. With the government taking 51 percent stake in the company, Repsol's stake drops to only 6 percent of YPF SA. Repsol's value hit a 52-week low with prices dropping to 16.42 euros a share.
On Tuesday, both Repsol—a Spanish firm—and the European Union also denounced Argentina for not complying with international business accords. According to the EU High Representative for Foreign Affairs and Security Policy Catherine Ashton, the forced buyout “will create a negative environment for foreign investors.” Spanish Prime Minister Mariano Rajoy called it a "negative decision for everyone."Repsol, for its part, has vowed to "carry out all pertinent legal actions to preserve the value of all their assets."
Repsol has stated that if the Argentine government wanted to buy a majority stake at YPF, it would cost $9 billion—a notion rebuffed by Argentina, which prefers a valuation by an Argentine government agency. Argentine Vice Minister of the Economy Axel Kicillof also added that YPF would not be paying dividends in the coming years, instead reinvesting them into production.
Commerce Minister Eduardo Samán announced on Saturday that “patents have become a barrier to production” and stymie access to medicine, placing the interests of multinational pharmaceutical companies ahead of the welfare and needs of the Venezuelan people. With President Hugo Chávez calling patents a “trap,” the government will now revise its patent system, annulling certain pharmaceutical patents and allowing domestic manufacturers to produce licensed medicines. This action follows a recent reform in intellectual property laws authorized by President Chavez.
In a press release issued by the Autonomous Service for Intellectual Property (SAPI), the “technical information” of patents licensed in Venezuela will be posted on the SAPI website so that anyone can “make use [of the information],” which would allow “Venezuelan technicians to improve new technologies that have been developed. ” The president of Venezuela’s pharmaceutical business chamber, Edgar Salas, said this could potentially scare off foreign investment, result in internal shortages of medicine and “create obstacles to importing the newest medicines.” Venezuela currently ranks at the third largest pharmaceutical import market in Latin America, estimated at $1.2 billion.
The latest pharmaceutical developments come on top of previous moves that have jolted the business community, namely nationalizations in the energy, concrete, telecommunications, and steel industries.
June 1: This AQ-Efecto Naím segment looks at sustainable cities in the hemisphere.