MADRID Spanish construction company ACS (ACS.MC) sold a 3.7 percent stake in Iberdrola (IBE.MC) on Wednesday, ditching its strategy of gaining more control over the utility to focus instead on cutting heavy debt.
ACS, headed by Real Madrid soccer club President Florentino Perez, has spent nearly three years fighting Iberdrola to build a stake in the power company in an effort to diversify away from Spain's ailing construction industry.
The builder said on Wednesday the sale will hit its earning by 540 million euros ($710 million) this year after placing the stake for 3.62 euros per share, well below what it paid.
The 800 million euros obtained from the sale would be used to help cut the group's 8 billion euro debt pile, it said.
ACS, Iberdrola's main shareholder, is left with about 14.9 percent of the stock. Perez had previously said he was aiming for a stake of 30 percent to get more control over the company.
"It is a strategy turn which we think is driven by the fall in the share price of the power company and the need for ACS to put up more collateral", said broker Renta 4.
The two groups have been involved in a long, drawn-out conflict over Iberdrola's refusal to grant ACS a place on its executive board. Last Friday, Spain's Supreme Court rejected Iberdrola's challenge to a new law scrapping a company's power to restrict individual shareholder voting rights to 10 percent.
ACS said on Wednesday it planned to remain a stable, long-term partner in the power company.
The builder is planning to cut debt further by selling non-strategic assets. Perez said last month the sales could generate 3 billion euros this year.
Iberdrola shares, which are down by almost 20 percent this year, were off 7.8 percent on Wednesday at 1230 GMT while ACS shares fell 6 percent.
After ACS, Iberdrola's next biggest shareholder is Qatar Holding, the direct investment arm of the Qatar Investment Authority with 8.45 percent, followed by banking group BFA with 5.35 percent and Basque savings bank BBK with 5.3 percent. ($1 = 0.7610 euros)
(Editing by Paul Day and Erica Billingham)