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A Long-Lasting Affair

20 April 2017 by lberuti

11 years ago, the Benetton family who controlled ATLIM ( Atlantia SpA ) via their holding Edizione – it has a 30.25% stake in the Italian toll road company -, attempted to merge it with its Spanish peer ABESM ( Abertis Infraestructuras SA ). The transaction was then blocked by former Prime Minister Romano Prodi’s government. It looks that the project was never completely abandoned though, and discussions between the 2 companies have resumed, with the blessing of Caixa, ABESM’s main shareholder – they own roughly 22% -. ATLIM released a statement on Tuesday saying that “a very preliminary and generic interest to examine common projects” had been expressed to ABESM. Because deals equal potential financing, ATLIM’s 5-year risk premium was sent 11bps wider to 95bps. Today, details of a possible deal structure emerged. While ABESM could be valued at €16Bln, the offer may include as much as €10Bln in cash – with the rest paid in stocks – and ATLIM could seek up to €8Bln in financing for the deal, thus confirming investors’ early intuition. After consolidating some of its widening yesterday, ATLIM’s 5-year CDS was back to 95bps at the close.