Italian State-Backed Lender May Buy Autostrade Stake in IPO

A key investor of Atlantia SpA opposes a revised deal proposal that would see Italy’s Cassa Depositi e Prestiti SpA buy a controlling stake in Autostrade per l’Italia SpA in an initial public offering.

The proposal, aimed at ending Atlantia’s long-running dispute with the government by spinning off its toll-road business, would ensure that state-backed lender CDP and other new buyers acquire their stake at market value, responding to investors’ concern over the pricing of the assets. News of the potential deal pushed Atlantia’s shares up as much as 5% on Monday and will now be reviewed by the holding company’s board.

Under the revised deal, CDP would directly acquire a 33% share of Autostrade in a capital increase. Partners identified by CDP would buy another 22% at the same time of an IPO that would tender a further 39% of the company, according to people familiar with the proposal. With that mechanism, the price would be decided by investors in the listing process and not earlier by advisers, the people said.

Still, TCI Fund Management Ltd., which owns more than 5% of Atlantia through a direct stake and swap contracts, poured cold water on the plan.

“TCI strongly opposes any capital increase, or IPO at a discounted price,” TCI’s billionaire activist investor Christopher Hohn told Bloomberg on Sunday. TCI values Autostrade at about 11 billion euros to 12 billion euros ($12.9 billion to $14 billion) before any transaction.

The deal in its current form raises the risk of legal action by third party investors who would be penalized, according to a note by Fidentiis Equities SV SA.

“The only way to ensure an entry of CDP in Autostrade that is fair for Atlantia and international investors, is a straight sale of Atlantia’s 88% stake in the unit through a competitive process led by reputable international intermediaries, or a spinoff at fair market price, with the Benetton’s stake being offered simultaneously to investors, including CDP,” TCI’s Jonathan Amouyal said.

TCI wrote two letters to the Italian government earlier this month claiming that the nationalization of the toll-road manager is a “de facto illegitimate expropriation” of investors’ stakes. Atlantia wasn’t immediately available to comment. A representative for CDP declined to comment.

License Dispute

Prime Minister Giuseppe Conte’s government and the Benetton family earlier this month agreed to settle a dispute on Autostrade’s highway licenses stemming from a deadly 2018 bridge disaster. Benetton-controlled Atlantia was forced by the Italian government to choose between a revocation of the toll-road concession and a sale of its stake in Autostrade.

The price for Autostrade is a key to the plan and disagreement over the company’s valuation risks delaying its nationalization at a time when the rebuilt bridge in Genoa is about to be inaugurated. Atlantia and CDP have disagreed over the price, making it likely there will be a delay in signing a preliminary agreement that was expected on July 27, people familiar with the matter said last week.

The government is keen to ensure investors see the operation as market friendly, an official said earlier this month. The person asked not to be named because the talks are confidential. The new plan for CDP’s intervention was first reported by Ansa.

©2020 Bloomberg L.P.

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