Company Trend Analysis - Abertis Takeover Deal To Benefit ACS And Atlantia - APR 2018

BMI View: A deal between Atlantia, ACS and Hochtief, which will see the firms complete a joint takeover of Spanish concession owner Abertis, will benefit the three firms and enhance their ability to compete for infrastructure assets, public-private partnerships in particular.

We expect a recently announced deal between Italian infrastructure concessions manager Atlantia, Spanish construction group Actividades de Construccion y Servicios (ACS), and ACS subsidiary Hochtief for a joint takeover of Spanish concessions manager Abertis Infraestructuras will strengthen the three firms given strong synergies, allowing them to better compete for projects. On March 14, it was confirmed that Atlantia, ACS and Hochtief had reached an agreement for a joint takeover of Abertis following a number of days of reported negotiations. The complex deal, which must still be approved by Atlantia's board, has several facets:

  • Atlantia will withdraw its offer for Abertis, which will be bought by Hochtief for EUR18.2bn in cash. Hochtief will then delist the firm and create a holding company together with ACS and Atlantia which will buy Hochtief's investment in Abertis and will be owned by the three parties with Atlantia owning 50% + 1 share, ACS 30% and Hochtief 20% less one share.
  • Hochtief will issue 6.43 million new shares which will be subscribed to fully by ACS and then sold to Atlantia, giving the Italian firm a roughly 24% stake in Hochtief.
  • Atlantia, Hochtief and ACS will enter into a long-term partnership agreement aiming to maximize synergies between the firms with a particular focus on jointly developing new public-private partnerships.

For both Atlantia and Hochtief, the deal ends the prospect of a bidding war for Abertis after the firms had presented competing bids for the company in recent months, an outcome which likely would have substantially inflated the costs of the Spanish firm for whichever firm succeeded in buying it. Further, the fact that the new company, though under the control of Atlantia, will remain based in Madrid with Spanish firm ACS owning a large stake will avoid political opposition within the Spanish government which a full takeover by the Italian firm could have provoked.

Abertis Purchase To Provide Geographic Diversification
Abertis - Kilometers of Road Concessions Managed By Country
Source: Abertis, BMI

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