Vinci Seals $5.8 Billion Deal Marking Push Into Renewables

Vinci SA’s move to buy a core business of Spain’s Actividades de Construccion y Servicios SA ​​​for about 4.9 billion euros ($5.8 billion) will turn the French infrastructure giant into a global player in renewable energies.

The deal that was more than six months in the making expands Vinci’s reach into Spain and Latin America, according to a statement Thursday. The Madrid-based ACS unit will add about 45,000 employees and 6 billion euros in annual sales.

ACS, whose chairman Florentino Perez also heads the Real Madrid soccer club, had received a non-binding offer from Vinci in October. Its shares fell as much as 1.8% in Madrid, while Vinci rose as much as 3.1% in Paris.

The deal by the sprawling French company, which manages about 45 airports worldwide and operates major highway concessions in its home country, will be Vinci’s most significant since agreeing to acquire a majority stake in Gatwick Airport in 2018. Vinci, the world’s largest construction firm, had targeted power-saving projects as a strategic priority, and has made some smaller transactions to expand in energy work in recent years.

“This acquisition is a unique opportunity for Vinci to create a global player in energy contracting and to develop renewables projects,” Chief Executive Officer Xavier Huillard said in the statement.

The accord won’t have a significant impact on the balance sheet strength, while earnings per share accretion is expected to be mid- to high-single-digit, from the first year after closing, the company said.

Growing Market

ACS will be divesting of one of its main businesses, the industrial unit Cobra Instalaciones y Servicios SA, whose revenue amounted to 11% of the total in 2019. The company will keep its renewable energy unit Zero-E, that will be carved into a separate unit alongside 15 other concessions.

Vinci gets an edge in the growing market for renewable power assets. Teams that can develop solar and wind farms are in high demand right now as returns are higher for developing a project rather than buying one that’s built.

What Bloomberg Intelligence says:

“Vinci’s agreement to buy ACS’ Energy business for up to 5.5 billion euros, with 4.9 billion in cash, is a win-win for both. But we note the overture is slightly below our valuation for the unit.”

-- Sonia Baldeira, BI analyst

The acquisition includes a pipeline of 15 gigawatts of new renewable power assets, mostly solar and onshore wind, plus a team that can originate more.

Vinci is also looking at 8 gigawatts of offshore wind projects. Depending on how much of those actually get built, the assets could turn the company into a significant developer of green power.

The companies plan to negotiate a partnership agreement for the acquisition of “mature renewable assets” that are fully developed, built and connected to the grid by the company in the future, Vinci said. The venture would be 51% owned by the French company.

©2021 Bloomberg L.P.

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