Atlantia Wins The First Round In The Bid For Abertis; ACS Will Make The Next Move

Abertis has approval of Atlantia's bidAbertis has approval of Atlantia's bid

Spain’s stock market regulator yesterday accepted Atlantia’s bid for Abertis, acknowledging that the content of the explanatory document presented by the Italian company is sufficient and in line with current regulations.

We would remind the reader that Atlantia’s offer consists of a €16,50/share cash bid for the Spanish firm, as well as an exchange of 0,697 new Atlantia shares for each Abertis share (equivalent to €19,36 at Atlantia’s current price) for a maximum 23.22% of capital. The new Atlantia shares will not be transferable until February 15, 2019. Abertis shareholders will be able to choose one of the two methods of payment or a combination of both. Assuming a take-up of the maximum percentage of Atlantia shares, 23.22%, the average price is €17,16, taking Atlantia’s closing price yesterday of €27,77.

The offer is only effective if there is a minimum acceptance level of 50% plus one share and 10.1% of shareholders who accept the offer opt for the share exchange. The acceptance period is 15 calendar days from the publication of the bid in the Boletin de Cotización de las Bolsas (Stock markets’ trading bulletin).

Abertis’ closing price yesterday of €17,35 is both higher than Atlantia’s cash bid as well as the offer via the share exchange. So Abertis is trading at a premium and the market is discounting an improvement on the initial offer. Bankinter recalls that from the very first day Atlantia presented its bid, they recommended that shareholders hold on to Abertis, proposing that they should not accept the €16,50/share offered:

“We defend the argument that it’s very likely there will be an improved counter-bid from a third party. The could be announced up to a maximum of 5 days before the acceptance period for Atlantia’s bid expires. For the time being, Abertis shares have revalued +6.1% from the day before the announcement of the operation (trading at a current price of €17,35 vs €16,35 on 15/5/2017). So our recommendation has been proven to be right. We value the company, including a control premium, at around €18 (€18,05).”

The approval of Atlantia’s bid for Abertis coincides with the latter’s decision to move its headquarters out of Barcelona, given the uncertainty sparked by the Catalan independence challenge. The company expects to approve the move this Monday during an extraordinary board meeting.

The authorisation of the bid will also establish the acceptance period for Abertis shareholders to decide on the offer. Also the period during which Abertis’ board, and also Criteria Caixa Holding as its core shareholder, will have to challenge the bid.

It also gives Atlantia the possibility of improving its offer and establishes the period for ACS to consider its eventual competing bid.

ACS will have to launch a bid at a higher price than Atlantia’s €16,50 per share.