ACS Weighs Construction Spinoff Amid Toll Roads Focus

Actividades de Construccion y Servicios SA is weighing a spinoff of its construction business as it focuses on becoming a major European toll-roads operator, according to people familiar with the matter.

The Spanish construction company is conducting internal analysis of the move to help simplify its corporate structure, the people said, asking not to be identified discussing confidential information.

Deliberations are in the early stages and ACS is considering alternatives to a spinoff for the unit as well, according to the people. A representative for Madrid-based ACS declined to comment.

Shares in ACS were trading down 0.1% at 5:24 p.m. in Madrid on Tuesday, giving the company a market value of about 8.6 billion euros ($10.2 billion).

Together with its concessions business, construction forms part of ACS’s infrastructure division. Construction delivered reported net profit of 100 million euros in 2020. ACS has been looking to streamline operations and make room to grow into a leading operator of toll-road concessions under its billionaire founder Florentino Perez, who is also chairman of Real Madrid C.F. soccer club.

Earlier this month, ACS completed a 4.9 billion-euro sale of its industrial services unit to Vinci SA and a few days later made a bid to acquire the domestic highway unit of Italy’s Atlantia SpA. Perez said he would seek to merge Atlantia’s Autostrade per l’Italia SpA with Abertis Infraestructuras SA, a toll-road operator jointly owned by ACS and Italy’s Benetton family, who also control Atlantia.

While ACS is still considering how it will structure the Autostrade deal, one option would be to pay using a mix of equity and cash, people familiar with the matter said. ACS is keen to have other financial investors join its bid, one of the people said.

Any spinoff of its construction business would be complicated by the fact that ACS has two listed subsidiaries, Hochtief AG in Germany and Cimic Group Ltd. in Australia. Hochtief owns the bulk of ACS’s Abertis stake. Perez has said he does not want to buy out minority investors in either Hochtief or Cimic.

Reported net profit at ACS’s infrastructure division plummeted from 193 million euros to 99 million euros in 2020. This was mainly on the back of a loss at the concessions business, which was hit by pandemic mobility restrictions in key markets like Spain and France. Prior to the Covid-19 crisis, concessions accounted for 42% of ACS’s ordinary infrastructure profit.

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