Sacyr bids 6.5 bln euros for control of Eiffage

20th April 2007, Comments 0 comments

MADRID, April 19, 2007 (AFP) - Spanish group Sacyr Vallehermoso bid 6.5 billion euros (8.8 billion dollars) for total control of Eiffage of France on Thursday in a deal that would create a European construction giant, striking back a day after being jilted in a boardroom battle.

MADRID, April 19, 2007 (AFP) - Spanish group Sacyr Vallehermoso bid 6.5 billion euros (8.8 billion dollars) for total control of Eiffage of France on Thursday in a deal that would create a European construction giant, striking back a day after being jilted in a boardroom battle.

The bid would give rise to the fourth-biggest European civil engineering and construction group, and "a major player in construction in Europe," Sacyr chief Luis Del Rivero told a news conference in Paris.

The new entity would operate 3,400 kilometres (2,125 miles) of motorways throughout the world, of which more than 3,000 kilometres would be in Europe and Latin America, he said.

The bid, if successful, would create a "truly European group" with a strong base in France, Spain and Portugal, with total annual sales of 15.4 billion euros.

This would rank it after French group Vinci with sales of 25.6 billion euros, French company Bouygues with 19.0 billion euros and the German firm Hochtief with 15.5 billion euros.

The proposal came three days before the first round of a presidential election in France in which debate about defence of French industry is a central factor. It also demonstrates the rapid rise of leading Spanish companies and their determination to expand abroad.

Del Rivero said a takeover would result in "big synergies" because Eiffage "has expertise in some fields and some countries" and Sacyr "knows others" but would not result in a loss of jobs.

"When one talks about synergies normally one talks about job losses and here that is not the case, on the contrary," he told the news conference.

He said the terms amounted to a premium of 30.6 percent on the average price during a month to March 20.

The market value of Eiffage on Wednesday was 10.38 billion euros.

Sacyr Vallehermoso, already the biggest shareholder in Eiffage with 33.32 percent of the capital and 29.0 percent of the votes, said in a statement that the two companies were "strongly complementary."

It said it had made an offer on Thursday to buy all of the outstanding shares in Eiffage and was offering 12 of its own shares under a new issue for five existing Eiffage shares. This values the two thirds of Eiffage it does not already own at 6.5 billion euros on the basis of the closing price of Sacyr stock of 43.62 euros per share on Wednesday.

Eiffage said its board would meet on Monday to analyse the Spanish bid,  which is set to begin May 9 and run until July 2.

A source close to the French firm said Sacyr should make a cash bid of 129.5 euros per Eiffage share instead of the all-share bid "because that would cost it less."

Del Rivero however expressed confidence that the bid would prevail.

"We are confident in the success of our offer. We believe that it will succeed," he said.

Sacyr shares closed up 2.82 percent at 44.85 euros while shares in Eiffage, which rose sharply in recent weeks amid speculation of a possible takeover bid, ended down 5.08 percent at 105.84 euros.

Both stocks were suspended during morning trade.

The offer came in the face of an acrimonious meeting of shareholders in Eiffage that rejected an attempt by Sacyr to obtain five boardroom seats.

The meeting also removed the voting rights of 89 other Spanish shareholders representing 17.5 percent of the votes on allegations that they were acting improperly in concert.

Eiffage is a high profile name in French industry, owning a subsidiary with roots in the work of Gustave Eiffel who built the Eiffel tower and having recently constructed the spectacular Millau Viaduct in southern France, the highest bridge for vehicles in the world.

The company is the third-biggest public works construction group in France and the sixth-biggest in Europe.

Sacyr Vallehermoso has witnessed strong growth over the past few years.

In 2006 it invested 8.9 billion euros in diverse shareholdings, which resulted in a doubling of its net debt from 923 million to 1.89 billion euros.

It owns more than 20 percent of the Spanish-Argentinian company Repsol YPF.

A takeover of Eiffage would increase company turnover by 2.5 billion euros," Del Rivero said.


Copyright AFP

Subject: French news

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