Banc Sabadell | The bank guarantees of around 1 Bn€ held by Ferrovial´s Services Division (which we value at approximately 2.5 Bn€; ~7X EV/EBITDA) are complicating its sale and could lower its valuation to 2 Bn€ (vs 2.5 Bn€ rumoured).
In concrete, the change of control in this subsidiary would allow the banks to leave the guarantees without effect, obliging the buyer to renegotiate these guarantees in much less favourable conditions. On the other hand, the funds Apollo and Apax are the favourites to buy the division, followed by Brookfield.
Negative news with limited impact. A sale for 2 Bn€ (~5.7X EV/EBITDA) would have an impact of -2.5% in our Objective Price. In any case, we continue to think that the sale of the Services Division would be the main catalyst for the shares, not so much the sale price as the strategic fit, to the extent that it would permit Ferrovial to reduce its debt (to ~3.5X Net Financial Debt/EBITDA from 7.4X Banc Sabadell estimate for 2019) and focus its efforts in its infrastructure divisions (Motorways and Airports: 83% of the O.P). We recall that the close of the operation is expected in the first quarter of 2020.