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Atlantia proposes tie up with Spanish rival Abertis

Italian toll road company Atlantia has proposed a merger with Spanish counterpart Abertis.19 Apr 2017

Abertis issued a regulatory statement saying that "has expressed its interest in assessing a potential corporate transaction, the terms of which are yet unspecified", followed by a further statement saying that a meeting had taken place between the management of the two companies and their advisors, in which Atlantia "shared its preliminary ideas on the structure of a potential corporate transaction".

The meeting discussed the possibility of structuring the transaction as a public tender offer for Abertis shares, with different consideration options including in cash, shares, or a combination of both, but did not arrive at a concrete proposal, Abertis said

No possible valuations of Abertis or Atlantia have been specified, nor have any transaction prices or other conditions been set to date, it said.

"At present, there is no specific proposal or action plan, and we are not aware whether there will be more concretion in the future regarding an eventual transaction. As a result of the above, the Abertis board of directors has not met to deliberate over this subject," Abertis said.

Atlantia issued its own statement in response to media coverage, saying that "among the various strategic options that the company regularly assesses, it has been expressed to Abertis a very preliminary and generic interest to examine common projects".

Atlantia has 5,000km of toll roads in Italy, Brasil, Chile, India e Poland, according to its own website, while Abertis' 2016 annual report said it currently manages 8,600km of toll roads across 14 countries in Europe, America and Asia.

"The proposed move would be a positive one for Abertis which has been struggling in recent years due to oversupply in the Spanish road-building market," said construction expert Ricardo Garcia of Pinsent Masons, the law firm behind Out-Law.com.

"Some of the Spanish toll roads have entered into bankruptcy. This, together with a number of toll road operators beginning legal action against the Spanish government as a result of negative traffic levels and low profitability, has convinced Spanish operators of the need to go global," Garcia said.

"A merger of Atlantia and Abertis would create one of the largest infrastructure groups in the world, and certainly in Spain, but there will still be strong competition in the Spanish market where many construction firms have moved into running toll road concessions," he said.

"So far the Spanish government has only said that it will wait until the details are clear before applying the relevant EU competition law," he said. "The European Commission, on the other hand, may have concerns about the impact on the broader European market."