Blackstone and the Real Madrid boss at an auction? Let’s hope

A company that combines short-term exposure to a travel recovery with long-term protection from the ravages of inflation is likely to generate a lot of interest. That should foreshadow a fierce battle between the major bidders to buy Atlantia SpA, the Italian infrastructure giant backed by the billionaire Benetton family. But some protagonists have shape when it comes to avoiding painful auctions.

Florentino Perez, the construction magnate and president of Real Madrid football club, is working with US acquisition firm Global Infrastructure Partners and Brookfield Asset Management Inc. to a potential bid for the $17 billion ($19 billion) highway and airport operator, Bloomberg News reported Wednesday. The consortium faces competition from the behemoth of the buyout world, Blackstone Inc.

Atlantia has the attractive features of infrastructure: predictable, inflation-linked cash flows, linked to long-term government contracts. Shares have risen sharply as concerns about rising consumer prices have increased (this is also a low-traded stock that can be easily moved by speculation). While the pandemic has limited revenues from aviation and highways, the longer-term investment case is clear.

The Italian government forced Atlantia to sell its majority stake in Autostrade per l’Italia SpA, the Italian toll road operator, after the deadly collapse of the Morandi Bridge in 2018. A partnership between Blackstone, Macquarie Asset Management and the Italian postal company bank agreed. to buy it, and Atlantia will soon receive more than 8 billion euros in proceeds. Adjust that and a deal on the shrunken Atlantia wallet is more affordable than it first appears.

For Perez, this is a well-known case. Atlantia’s main asset is Abertis, the Spanish toll road operator which it owns together with Actividades de Construccion y Servicios SA, the Madrid-listed construction group it leads. Perez bid for Abertis in 2017 against Atlantia, then forced the Benettons into a partnership rather than outbid him. ACS said on Wednesday it had an exclusive agreement with GIP and Brookfield to acquire a majority stake in Atlantia’s highway concession business, implying that the consortium’s plan is to divide the assets between them rather than jointly own all of it. thing.

As for Blackstone, a deal would be the natural follow-up to the investment in Autostrade.

Determining the undisturbed reference price for a trade is not easy given the recent surge in Atlantia’s stock. An acquisition with a standard premium of 30% above the three-month average share price through April 5 would cost about $22 per share. The average analyst target for the stock is EUR 19.39. Size is not a barrier: there will be no shortage of infrastructure funds eager to be involved as partners on both sides.

An important question is whether the Benettons are trying to roll their minority stake into a bidding vehicle while other shareholders cash in, again lowering the cost of an acquisition. Their agreement seems to be the key to a transaction. Blackstone would have to structure a deal to be independent of Autostrade’s existing ownership by its funds. Yet it can be controversial to make an indirect link to the Benettons so soon after the tragedy of Genoa.

The risk to Atlantia’s shareholders is that this situation will progress along the lines of other deal situations involving these buyers and culminate in some form of joint offer. Just as Perez and Atlantia chose to share Abertis rather than compete for sole ownership, last year GIP and Blackstone decided not to compete for a UK-listed private jet tank company and entered into a partnership in a joint bid. .

For Italy, the situation is a test of its commitment to free markets. Atlantia’s assets are largely located outside the country. Still, the company is one of the top-rated Italian companies and it’s unlikely that politicians will enjoy it being split. That could play in Blackstone’s favor if it aims to keep Atlantia intact, especially if the Benettons also want to keep the company as it is. Whether there are two competing offerings that are both available is not yet clear.

Atlantia’s board faces a tough job. It must primarily ensure that every transaction leaves the company with a responsible owner who does not overload these critical assets with leverage. And whatever the Benettons want, they need to remember that it’s their duty to all shareholders, and that means trying to get them the best price for any exit. Getting an auction started may be easier said than done.

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This column does not necessarily reflect the views of the editors or Bloomberg LP and its owners.

Chris Hughes is a Bloomberg Opinion columnist on deals. He previously worked for Reuters Breakingviews, the Financial Times and the Independent newspaper.

More stories like this are available at bloomberg.com/opinion

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