Atlantia Ready for Toll-Road Bidding War With Real's Perez

(Bloomberg) -- The Benetton family’s Atlantia SpA is preparing to raise its bid for Spanish toll-road operator Abertis Infraestructuras SA and has the cash for a prolonged battle with Real Madrid Chairman Florentino Perez, according to the Italian company’s chief executive officer.

“We have enough financial resources to sustain an eventual bidding war,” Atlantia CEO Giovanni Castellucci said in an interview. Though the Italian infrastructure company seeks to compete successfully to win control of Abertis, higher offers “won’t reach any irrational point,” the executive said.

“The offer we presented in May was not our reservation price and we have room for improvement, " Castellucci said. “We’re going forward to make the best possible offer."

The battle for control of Abertis will likely be decided in the first quarter of next year. A 16.3 billion-euro ($19.4 billion) offer by Rome-based Atlantia was halted to give Spanish authorities time to review a rival proposal from Perez’s ACS Actividades de Construccion y Servicios SA. Regulators took several months to review, ultimately approving the Italian bid in October. Atlantia’s interest in Abertis was first reported in April by Bloomberg.

ACS has since lodged a counter-bid, and Atlantia will wait to hear from regulators before deciding on a new offer, Castellucci said. A review of the Spanish company’s latest proposal is expected by early next year. Atlantia executives are meeting investors in New York and Boston this week to sound out support for an eventual higher bid.

ACS’s German Hochtief AG unit in October offered 18.6 billion euros in cash and shares for Abertis as part of a proposal to keep it in Spanish hands and help diversify ACS away from its core construction business.

Shares of the companies involved in the fight reversed gains to decline in European trading after the Italian company said it’s preparing to raise its bid. Atlantia fell as much 1.4 percent to 27.53 euros in Milan trading, as ACS lost up to 2 percent in Madrid, and Hochtief fell 1.3 percent in Frankfurt to the lowest since it made its bid Oct. 18, based on closing price.

Government Opposition

Atlantia has also faced opposition from some members of the government in Madrid who favor a Spanish solution, a situation that’s being closely monitored by investors. 

If its bid succeeds, Atlantia will “continue a growth project for Abertis which would create value for Spain,” Castellucci said. “Our aim to make Abertis stronger and more financially solid is in the interest of Spain,” he said, noting that the company would continue to be autonomous and listed in Madrid.

Abertis’s biggest investor Criteria Caixa SA said it supported the initial Atlantia offer and has yet to comment on ACS’s bid. Caixa owns about 22 percent of Abertis.

Public Domain, Defense

Energy Minister Alvaro Nadal reiterated that Atlantia should be forced to seek permission from the Spanish government to buy Abertis, since the bid involves “questions of public domain and defense,” El Economista reported Nov. 28, citing comments by the minister. Spain’s public works ministry is seeking an opinion from a government attorney on the matter, El Confidencial reported on its website.

Regardless of outcome, the battle over Abertis looks likely to result in the biggest acquisition announced this year. Including assumed debt, ACS’s proposal values Abertis at about 37.7 billion euros, according to data compiled by Bloomberg. If Atlantia wins, it would mark the biggest foreign acquisition by an Italian company since utility Enel SpA bought Spain’s Endesa SA in 2007.

©2017 Bloomberg L.P.