Italy's Atlantia makes step to acquire Spain's Abertis
A possible merger would create the world's biggest toll road operator
19 May, 2017
Atlantia's annual earnings before deductions are about €6.6bn.
Italy's Atlantia bid last Monday €16.3bn for Spain's Abertis in an effort to create the world's biggest toll road operator with a market value of more than €36bn, news wires reported. While Atlantia said its cash-and-share offer was friendly and the two have been in talks for weeks, Abertis said it would not respond until it is legally obliged to, according to Reuters. Both companies are trying to diversify away from their respective home markets and had already agreed a merger in 2006, but this fell through due to Italian government opposition.
Atlantia, which is controlled by the Benetton family, is keen on a tie-up with Abertis, which gets a third of its core earnings from France and has extensive operations in Latin America, to help it diversify away from low-growth Italy. Abertis in turn needs to find new business opportunities as it faces the expiration of motorway concessions in Spain and a deal would allow the combined group to generate around 60% of core earnings outside Italy. The Rome-based company says the takeover aims to create a world leader in transport infrastructure management, with annual earnings before deductions of €6.6bn.
The Criteria holding company, which has a stake of 22.3% in Abertis, said in a statement it would carefully consider the offer, while a source close to it said it and Abertis could take weeks or even months to give a response. However, Atlantia's offer contains a number of sweeteners for the Spanish side and an Italian source told Reuters that the bid did have the backing of Criteria. The bid also includes the possibility for Criteria or other shareholders to opt for a payment in shares and sets a minimum acceptance level of the share offer at 10%.
The Benetton family would continue to be the top shareholder of the combined group with an estimated stake of 25.5%. The equity component of the offer, if accepted, would allow Criteria to own a stake in the combined group of around 15%, higher than previously expected. Atlantia is also offering three board seats for Abertis's shareholders and the company would continue to be traded at the Madrid stock exchange.
“Over the past few weeks, we have worked to design a offer that is friendly and attractive for all shareholders, stakeholders and the management of both companies,” Atlantia's CEO Giovanni Castellucci said. “We believe we have achieved this goal.” The share component of the offer envisages the issuance of new Atlantia shares on the basis of a swap ratio of 0.697 Atlantia shares for each Abertis one. Atlantia said its offer aimed to secure at least 50% plus 1 share of Abertis.
Atlantia's offer is structured to avoid some of the pitfalls that traditionally befall cross-country deals. Most importantly, Abertis would remain a listed company in Spain with its separate headquarters and management. Credit Suisse and Mediobanca acted as financial advisers to Atlantia. BNP Paribas, Credit Suisse, UniCredit and Intesa Sanpaolo have arranged a €14.7bn financing package to fund the bid.