Intermoney | Ferrovial (FER) (Hold, PO €39) announced on Thursday an agreement with AtkinsRéalis, a Canadian engineering firm formerly known as SNC Lavalin Group, for the sale and purchase of 5.06% of the capital of the ETR407 motorway, for the sum of C$2.09 billion, or approximately €1.34 billion. Ferrovial thus increases its stake in ETR to 48.3%.
Ferrovial will acquire 3.3% at the closing of the agreement, while the remaining 1.8% will be acquired 18 months later. AtkinsRéalis will also sell an additional 1.7% of ETR to the CPPIB pension fund, while the PSP fund will in turn acquire 7.51% from CPPIB. The prices of these two transactions were not disclosed in Ferrovial’s statement.
Assessment: At the prices of the transaction between Ferrovial and AtkinsRéalis, the valuation of 100% of ETR’s capital would be around €26.4 billion, which is 53% higher than our implicit valuation of the Group, or €17.2 billion. Our current Target Price of €39/share includes a contribution from ETR of around €10/share, so translating today’s transaction to our Target Price for Ferrovial, it would increase by around €5.3 per share.
On the other hand, our valuation implies an EV/EBITDA ratio of 20x in 2025e, compared to 28x implied in today’s transaction. ETR distributed dividends in 2024 of €704 million (CAD 1,100 million), so today’s transaction would imply an implicit yield of 2.7%. We understand that as the new stake in ETR is less than 50%, Ferrovial will continue to consolidate this asset using the equity method. We will adjust our estimates in the coming days.
