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ACS sells stake in Abertis to CVC
By Mark Mulligan in Madrid and Martin Arnold in London
Published: August 11 2010 08:53 | Last updated: August 11 2010 18:59
ACS has agreed to sell part of its 25.8 per cent stake in Spanish infrastructure group Abertis to CVC, the private equity firm, in a complex deal which will allow the Spanish construction group to cut debt and build its holding in electricity generator Iberdrola.

Under the two-part deal, announced on Wednesday, ACS will sell its entire stake for €2.8bn ($3.6bn) to two funds set up by itself and CVC and then buy back 40 per cent of it. CVC will become the second-largest Abertis shareholder, with 15.5 per cent.

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La Caixa, the Catalan savings bank which last month considered taking part in a €11bn leveraged buy-out of Abertis with ACS and CVC, will remain the lead shareholder, with 28.5 per cent.

The buy-out plan was dropped late last month because La Caixa could not meet a deadline set by ACS and CVC. However, the bank on Wednesday did not discount a second phase in which it sold some of its holding in Abertis.

The acquisition will be financed mainly through a €1.5bn club loan and €900m in equity put up by CVC, and allow ACS to pocket about €2.3bn. After the recent €720m sale of its Spanish ports business, the construction company now has €3bn in sales proceeds to pay down debt and continue its assault on Iberdrola, Spain’s largest electricity group, in which it holds 12 per cent, directly and indirectly. ACS is highly geared – net debt is estimated to reach 6.6 times 2010 earnings before interest, tax, depreciation and amortisation.

ACS, led by Florentino Pérez, president of football club Real Madrid, has been trying to sell its Abertis stake for at least a year. However, possible industrial buyers such as Vinci of France and Italy’s Atlantia – formerly known as Autostrade – were not prepared to pay the asking price. Although mainly a toll road group, with motorway assets around Europe and the Americas, Abertis has diversified in recent years, building businesses in telecommunications infrastructure, satellites, car parks and airports.

The deal is unusual for London-based CVC, as it typically buys control of companies rather than minority stakes. It bought a 25.1 per cent stake in Evonik, the German chemicals and property group, two years ago, but this is the first time that CVC has bought a minority stake in a publicly listed company.

These deals have unsettled some investors in private equity funds, who ask why they should pay private equity’s high fees to have their money invested in publicly traded shares that anyone can buy.

However, a person close to CVC said that as the majority owner of the 25.8 per cent stake in Abertis it would exert significant influence. The person said the €1.5bn debt package – from La Caixa, Santander, Mediobanca and Société Générale – was flexible and would not require margin calls if Abertis shares fell.

In addition, CVC is hoping that it may be able to increase its stake and – debt markets permitting – complete its original plan for a full buy-out of Abertis.

Mediobanca advised CVC and ACS.


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Eric D. Schwerin
Rosemont Seneca Partners, LLC
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Suite 705
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(202) 333-1880
eschwerin@rosemontseneca.com
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