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December 19, 2008 1:21 pm
Ferrovial, the Spanish infrastructure group, may take advantage of weak stock markets to buy out minority shareholders in Cintra, its 68 per cent-owned toll road business.
The company, which heads the consortium that owns UK airports operator BAA, said in a regulatory filing on Friday that it had begun analysing the eventual merger with Cintra, which was spun off from Ferrovial at the end of 2004.
Cintra shares have been trading below most independent valuation for much of the last four years, and have proven particularly vulnerable to recent stock market turbulence. Troubles at the parent company, which is struggling under a €30bn debt load and is under pressure to divest BAA assets, have also weighed on the shares.
Credit Suisse, in a recent note to clients, says Cintra shares were worth about €16 each, compared with the €6 at which they were trading before Ferrovial’s statement. On Friday morning, they rose about 5 per cent to €6.30, valuing the entire business at €3.6bn and the minority stake at around €1.2bn.
It was unclear on Friday how Ferrovial would pay for the deal.
Cintra has €400m in cash reserves and it is set to raise an additional €600m, according to some estimates, through the sale of its Spanish car park business and Chilean motorway assets.
This added liquidity would provide a “welcome boost to Ferrovial’s balance sheet”, Citigroup said in a note to clients on Friday.
Consolidating more than 75 per cent of Cintra would also have fiscal benefits in Spain, according to the investment bank.
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