MILAN (Reuters Breakingviews) – Spanish magnate Florentino Pérez’s uneasy truce with Italy’s Benetton family has come to an abrupt end. Construction group ACS, which he chairs, has sided with funds Brookfield and Global Infrastructure Partners for a potential tilt at the Benetton family-controlled road operator Atlantia. A takeover would cost as much as 20 billion euros, net of debt, although asset sales would bring down the cost. Winning over the Italian billionaires, who own 33% of Atlantia, will be harder.
Pérez’s ACS and the Benettons have locked horns before https://www.breakingviews.com/considered-view/european-motorway-bidding-war-ends-in-uneasy-truce. The builder crashed Atlantia’s party in 2017 just as the Italian company was trying to buy Spanish toll road operator Abertis. After months of sparring, the rivals worked out a deal that gave Atlantia 50% of Abertis plus one share, and ACS and an ally the rest.
Pérez, who never lost interest in Abertis, is now trying a different type of assault. Brookfield and GIP would buy Atlantia and then sell Abertis to ACS after the deal goes through, insiders told Breakingviews.
A takeover would be quite a mouthful. A 30% premium on the undisturbed market value would require a price tag of 20 billion euros. That rises to 50 billion euros once net debt is added. But the outlay would likely fall to some 32 billion euros once Atlantia finalises the sale of Italian motorway unit ASPI in May, which will bring in 8 billion euros of cash and discard almost 10 billion euros of net debt. That would grant a return on invested capital of 6% once 2024 EBIT of 2.4 billion euros, as per Refinitiv forecasts, is taxed, comfortably above the company’s near 5% cost of capital, according to GuruFocus.
The question is whether newly installed family head Alessandro Benetton is willing to give up control. Atlantia has just emerged from a protracted dispute with the Italian government following the Morandi bridge collapse in 2018. Brookfield and GIP are open to letting the Benettons hang on to their 33% stake. But the deal would still mean playing second fiddle to the funds, and letting the Atlantia empire be broken up by an old foe. Benetton’s alternative plan of roping in Blackstone for a possible counterbid suggests he will not go along for the ride. For Pérez and his allies, sorting out the finances may be the easiest part of the takeover battle.
Follow @LJucca https://twitter.com/LJucca on Twitter
– Global Infrastructure Partners and Brookfield Infrastructure said on April 7 that they met with Atlantia’s top shareholder, the Benetton family vehicle Edizione, and made on March 30 a non-binding preliminary proposal to take over the Italian infrastructure group.
– Under an agreement sealed with Spanish infrastructure group ACS, which owns a large stake in Atlantia-controlled motorway unit Abertis, ACS would acquire control of Atlantia’s toll road concessions after the takeover of the Italian company.
– The funds said they have not reached an agreement with the shareholders of Atlantia over a possible takeover offer.
– The Benetton family, which controls Atlantia through a 33% stake, is in talks with U.S. fund Blackstone over a possible alternative takeover offer for the Italian group, Reuters reported.
– Shares in Atlantia were up 9.6% at 20.83 euros at 0745 GMT on April 7.
(Editing by Neil Unmack and Oliver Taslic)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.