Italy’s Atlantia has launched a bid to buy its Spanish rival Abertis in a deal that values the target at €16.3bn and would create one of the world’s largest toll road and infrastructure companies.
Atlantia announced its bid on Monday even though it did not have the full backing of the Abertis cornerstone shareholder Criteria, the Barcelona-based holding of the powerful Caixa foundation.
The offer is structured as an all-cash bid of €16.50 a share but also includes an equity option in the event that Criteria or other shareholders decide to own a stake in a combined group. This has been pegged at an exchange ratio of 0.697 per Abertis share, for up to 23.2 per cent of the total offer.
One person involved added that there were still certain obstacles to getting Criteria’s full support and that a deal was not done yet.
The holding company said on Monday that it would “evaluate the friendly offer, with care and with time and without haste”.
People close to the deal cautioned that it could take Criteria some time – 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 precisely to the needs of Criteria as it is just enough to cover its 23 per cent stake. 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.
Atlantia’s offer is also 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. Atlantia is also planning to transfer its Latin American assets to the Spanish group.
Shares in Abertis have steadily crept higher since Atlantia revealed last month that it was considering an offer for the company. Madrid-listed Abertis shares closed last week at €16.45, giving it a market value of €14.95bn. Shares in the company have risen 32 per cent in the past six months. Atlantia has a market value of almost €20bn.
A deal would create one of the largest toll road and airport operators in the world, with an important presence in Italy, Spain, France, Brazil and Chile.
A combination of the two groups would also help tackle the key weaknesses of both Atlantia and of Abertis. Though larger than its Spanish rival, Atlantia’s assets are heavily concentrated in its Italian home market. Buying Abertis would give the group a much more diversified and balanced portfolio.
Abertis, on the other hand, has struggled in recent years to win new business, and has seen the average lifespan of its toll road concessions fall steadily. Atlantia has no such worries. According to people close to the deal, a combined group would also be in a much stronger position to bid for large but costly toll road concessions in markets such as the US in coming years.
The fate of the Atlantia bid is now in the hands of Abertis shareholders, the most important of which by far is Criteria, a holding that long played a key role in steering the infrastructure group. 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.
Criteria is thought to be open to a tie-up, but has neither the need nor the desire to turn its stake into cash. The Barcelona holding would prefer to swap its current stake in Abertis for a stake in the combined group.
The Atlantia bid is already the second attempt to link the main Spanish and Italian toll road group. Abertis and its Italian rival came close to a €25bn merger more than a decade ago, but the deal was ultimately scrapped because of political resistance in Italy.
Atlantia, which is controlled by the Benetton family through its investment vehicle Edizione, operates 5,000km of toll motorways in Italy, Brazil, Chile, India and Poland. It also manages Fiumicino and Ciampino airports in Italy along with three airports in southern France.
Abertis manages more than 8,000km of toll roads in 14 countries, and is the leading operator in Spain, Brazil and Chile. The company reported earnings of €796m and sales of €4.94bn for 2016.