Business mulls fallout from Catalan crisis

Drugmaker first to announce move out of region

Drugmaker Oryzon Genomics became the first listed company to announce it is moving out of Catalonia following an illegal independence referendum in the region that has pushed Spain into political chaos. Other companies are considering doing the same.

Oryzon shares rose as much as 33% after it announced it would move to Madrid from Barcelona, indicating that investors welcome companies ridding themselves of the political uncertainty surrounding Catalonia’s push for independence.

Oryzon’s move is the clearest example so far of rising corporate anxiety, as other companies based in the coastal region prepare plans in case political tensions worsen.

At least one of the seven Catalonia-based companies in Spain’s Ibex-35 index has a contingency plan for leaving the rebellious region, a source said, although it wasn’t clear what specific circumstances would trigger a move.

At least one other company started studying possible scenarios several weeks before the referendum on Sunday, although no decisions have been made on contingency plans, said another source.

The seven Ibex-listed Catalan companies are banks CaixaBank and Banco de Sabadell, energy distributor Gas Natural, road operator Abertis Infraestructuras, drugmaker Grifols, phone mast operator Cellnex Telecom and property company Inmobiliaria Colonial Socimi.

With political and social tensions growing on the back of a police crackdown on voters and the national government calling regional leaders irresponsible, King Felipe gave a speech on Tuesday in which he called for the preservation of the unity of Spain and criticised the regional administration for breaking the law.

CaixaBank said it will defend the interests of clients, shareholders and employees amid the political standoff, and that commitment will guide future decisions.

A press officer for the Barcelona-based company declined to comment on the memo.

Some US companies that base their Spanish operations in Barcelona have prepared plans that would allow them to withdraw from Catalonia overnight if it secedes, Jaime Malet, chairman of the American Chamber of Commerce in Spain, said in an interview last month.

Oryzon’s board agreed to move the company’s legal domicile from the Catalan capital “to optimise its operations and relations with investors,” the drugmaker said in a regulatory statement.

No further details were offered and the company declined to comment further. Oryzon was founded in 2000 and employs 35 people, according to its website, and has a market value of €61.5m ($71.9m).

Oryzon shares rose 16% at one stage in Madrid trading after posting the biggest intraday gain since mid- November. The company has two experimental medicines in clinical trials, ORY-1001 for cancer and ORY-2001 for Alzheimer’s disease and other neurological disorders.

Markets are beginning to show the strain after initially responding with resilience even as circumstances appeared to worsen in the three days since the federal government cracked down on the illegal independence vote.

Yields on Catalonia’s bonds due in February 2020 jumped, widening the premium over comparable Spanish government bonds to the most in a year. Some analysts are warning of the prospect of another slow-burning bout of instability as the situation unfolds.

Bloomberg


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