• Sat. Dec 9th, 2023

Decoding Milei’s Strategy: A Comprehensive Analysis


Nov 21, 2023

Following the election of Javier Milei, the newly-elected president of Argentina, there has been a significant increase in shares of YPF on Wall Street. In particular, the oil company’s shares rose by 41.3% on a day when many Argentine companies experienced widespread increases. However, despite this promising start, privatizing YPF is not as straightforward as it may seem for Milei and his ruling party.

First and foremost, Milei must obtain authorization from Congress to transfer ownership of YPF to the private sector. While he may consider using the DNU (Decree of Necessity and Urgency), this option is not without risk. The DNU must also be approved by Parliament before any potential buyers can make their purchases.

Once authorization has been obtained, Milei will need to decide whether to sell the entire package to a single buyer or offer shares on the stock market. According to stock market analyst Sebastián Marill, anyone who owns more than 15% of the shares has an obligation under YPF statutes to make an offer for the entire company and agree with 49% of private shareholders before making any changes to ownership.

Furthermore, Milei must contend with legal challenges related to previous expropriations and compensation claims made by Repsol for its former control over YPF. In particular, New York Judge Loretta Preska ruled that Argentina owes Repsol $16 billion in damages for expropriating YPF in 2012 without giving holders of retail shares a chance to participate in public offers for ownership stakes at fair market value. This ruling was appealed but remains open today.

Despite these obstacles, Milei has expressed his commitment to revaluing YPF shares before privatizing them so that they can be sold in a beneficial way for Argentines. However, experts emphasize that this is an important operation that requires careful consideration and planning if it is to succeed successfully.

Overall, while there are certainly challenges ahead for Milei and his ruling party in terms of privatizing YPF, there are also opportunities for growth and prosperity if they can navigate these complex issues with care and diligence.

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