The final whistle has blown and Florentino Perez has emerged as the winner in continental Europe’s biggest takeover battle -- the game was tied after extra time, but you’d have to award the Real Madrid president victory on penalty goals.
Perez-led Actividades de Construccion y Servicios SA on Wednesday reached an agreement with rival suitor Atlantia Spa to construct a joint 18.2 billion euro ($22.5 billion) takeover of Spanish toll-road operator Abertis Infraestructuras SA.
Atlantia, which is backed by the Benetton family, will get a controlling stake in Abertis, making it look like it’s got the upper hand. But the deal is a long way short of what the Italians wanted, and well ahead of what Perez appeared capable of.
Atlantia’s aim was to diversify away from Italy through one jumbo deal that created a multinational company focused on infrastructure. Instead, the transaction sees it end up owning half of Abertis -- plus one share, conferring control -- and taking a 24 percent stake in ACS-controlled construction group Hochtief AG. ACS now has a rich partner.
While Atlantia is technically in the driving seat, the strategy for Abertis appears to have been dictated by Perez. The idea now is to exploit synergies between the building of infrastructure and its management, with the Hochtief shareholding creating a formal alliance. This is an unproven approach. A hybrid construction-infrastructure model was never Atlantia’s destination; its shareholders have invested in the Italian company on the basis that it’s a pure-play infrastructure group.
The Benettons won’t even get to nominate the Abertis chairman.
The consolations are small. Atlantia isn’t paying a premium for the extra share that gives it quasi-control, and it has avoided a bigger, overpriced deal.
But the joint venture is a departure for Atlantia. Given the strategic differences between the partners it’s hard to be confident that it will last. For now, this deal avoids a diplomatic spat between Italy and Spain -- which wasn’t too thrilled by the prospect of Abertis being controlled from Rome. Maybe the alliance will open doors for Atlantia in new markets. If not, a simple carve-up of Abertis between the two when tensions have eased would make sense.
The result comes despite Atlantia having vastly superior financial power to win the contest. Politics clearly played its part. Madrid had no formal powers to thwart a deal but the environment was such that Atlantia felt it needed to team up with a domestic bidder. That’s proof that governments don’t need vetos or public interest tests to stop deals they don’t like.
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Chris Hughes is a Bloomberg Gadfly columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.
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