Way ahead: Atlantia-Abertis tie-up would create the world’s largest toll road operator © AFP
Italy’s Atlantia launched a €16.3bn takeover bid to buy its Spanish rival Abertis on Monday, a deal that would create the world’s largest toll road operator with a combined 14,095km under management in 19 countries.
Atlantia unveiled a long-awaited all-cash offer that values Abertis at €16.50 a share as well as a share alternative designed to attract the Spanish company’s main investor Criteria, the Barcelona-based holding of the powerful Caixa foundation, which owns a 22.3 per cent stake.
A deal would create a powerful infrastructure group with an important presence in Italy, Spain, France, Brazil and Chile and help diversify both companies and address their weaknesses.
Though larger than its Spanish rival, Atlantia’s assets are heavily concentrated in its home market, where it also manages Rome’s Fiumicino and Ciampino airports. Abertis has struggled to win new business and has seen the average lifespan of its toll road concessions fall steadily.
A tie-up would also allow Atlantia to take advantage of readily available cheap debt to capture returns that surpass the cost of its borrowing. Atlantia’s gearing would increase to 5.4 times from 3 times to pay for the deal. The combined group would have pro-forma 2016 earnings before interest, tax, depreciation and amortisation of €6.6bn.
The share alternative structure, which is similar to that used by brewer AB InBev to win over major minority shareholders in rival SABMiller two years ago, has been pegged at an exchange ratio of 0.697 per Abertis share, for up to 23.2 per cent of the total offer.
The ratio implies a value of €16.87 a share based on last week’s closing prices, but was worth as much as €17.34 on Monday, as Atlantia’s stock price climbed.
Anyone taking up the share-swap offer would not be able to sell their stake until February 2019 — a condition that may only appeal to a long-term strategic investor like Criteria — and would have the right to appoint up to three directors to Atlantia’s board, which will be enlarged by the same amount to 18.
Criteria, whose uptake of the share alternative is crucial to the deal’s success, said in a statement it would “evaluate the friendly offer, with care and with time and without haste”.
If it does take up the full share alternative, Criteria would own around 15 per cent of Atlantia. Edizione, the investment vehicle of Italy’s Benetton family, would see its 30 per cent stake in Atlantia diluted to 25 per cent.
Shares in Abertis have crept steadily higher since Atlantia revealed last month that it was considering an offer. Madrid-listed Abertis fell 0.7 per cent to €16.34, giving it a market value of €16.2bn. The thin premium — just 8 per cent to its price before the April leaks, reflected the limited industrial synergies from a deal and a steep 32 per cent run-up in Abertis shares in the past six months.
People close to the deal cautioned that it could take Criteria at least four weeks to come up with a formal response to the offer. However, the share swap part of the proposal appears to be tailored to meet Criteria’s desire to continue to receive dividend payouts from its ownership.
The investment group has a long history with Abertis. Salvador Alemany, chairman of Abertis, is a trustee of the Caixa foundation. Francisco Reynés, the Abertis chief executive, is a former managing director of the Criteria holding.
Atlantia’s offer is also structured to avoid some of the pitfalls that often befall cross-country deals. Most importantly, Abertis would remain a listed company in Spain with its separate headquarters and management.
Atlantia is also planning to transfer its Latin American assets to Abertis. It would also look to reduce the company’s 34 per cent holding in Spanish telecoms infrastructure group Cellnex to just below the 30 per cent threshold to avoid having to make a mandatory takeover offer for it.
The two companies have been discussing a deal behind the scenes for months, leaving people close to all the major parties involved in the talks to be confident that a deal will be agreed.
Credit Suisse and Mediobanca are advising Atlantia, which is controlled by the billionaire Benetton family, whose holding company would become the biggest shareholder ahead of Criteria in a combination.
Banks including Intesa Sanpaolo, Credit Suisse, UniCredit and BNP Paribas are lined up to provide financing. Citigroup is adviser to Abertis.
The bid is already the second attempt to link the main Spanish and Italian toll road group. Abertis and Atlantia came close to a €25bn merger more than a decade ago, but the deal was ultimately scrapped because of political resistance in Italy.
Atlantia shares jumped 2.6 per cent to €24.83 in late Milan trading on Monday to give it a market capitalisation of €20.5bn.
