Autostrade, Abertis create toll-road goliath

ROME/MADRID, Apr 24 (Reuters) Italy's Autostrade agreed on Sunday to a buyout by Spain's Abertis in a deal they say will create the world's largest toll road operator and infrastructure company.

The deal, billed as a merger of equals, adds to a growing wave of cross-border mergers and acquisitions and will create a group with a market capitalisation of around 25 billion euros ( billion) and an enterprise value of 45 billion euros.

It sees Abertis buying Autostrade in a 1-for-1 share swap worth around 15 billion euros. Autostrade shareholders will be paid an extraordinary dividend of 3.75 euros per share.

''The new company will be the motor of development for the Italian and Spanish economies,'' Autostrade Chief Executive Gian Maria Gros-Pietro and Abertis Chairman Isidre Faine said.

At Friday's close, Autostrade's share price stood at 22.98 euros, while Abertis' shares ended at 20.94 euros.

Reuters data show that Abertis shares trade at a multiple of over 23 times forecast 2006 earnings per share, while Autostrade's trade at under 20 times.

Analysts were cautious about the chances of success of the new company that will run 6,713 km (4,172 miles) of motorways in Europe and operate more than a dozen airports in cities including London, Stockholm and Orlando.

The incoming Italian government of Romano Prodi has voiced concern to the deal, a move which is likely to reignite debate about a rise of economic patriotism in Europe.

''I see ... (a risk of) political opposition,'' one analyst said, who declined to be named.

He added the main positive effect was the tax advantage of moving the merged group's headquarters to Barcelona, a move that has sparked outcry among some Italian politicians.

The first chief executive will be Salvador Alemany, the present Abertis CEO. Management will be equally split between Italy and Spain.

POLITICAL OPPOSITION ''The operation seems to be more a takeover than a merger,'' Enrico Letta, a leading member of Prodi's coalition, told business daily Il Sole 24 Ore.

''I truly hope Autostrade's shareholders rethink such a deal ...

that does not seem to foresee the necessary infrastructure investments (in Italy)''.

Autostrade and Abertis shareholders are due to meet on June 30 to vote whether to accept the buyout.

Two of the largest shareholders -- the Benetton family holding company Schemaventotto and Spain's biggest savings bank la Caixa -- have already said they will vote in favour.

Italian newspapers speculated the companies were rushing to complete the deal to take advantage of the political limbo during the interregnum between the Prime Minister Silvio Berlusconi's outgoing government and Prodi's incoming.

The deal comes during a surge in mergers and takeovers of infrastructure companies as players seek to expand in order to meet the challenge from property and financial services companies that are diversifying into the area.

Dubai's DP World earlier this year bought London-based Peninsular&Oriental Steam Navigation Co. for .8 billion. Ferrovial is bidding 8.75 billion pounds (.6 billion) for BAA Plc, the world's largest airports operator.

The merged company will have 15 billion euros for new investments, a potential that is key to the deal with both Autostrade and Abertis seeking to increase their punching power having recently failed to win high-profile motorway bids.

The companies aim to complete their merger by the end of 2006 and the merged group would have proforma 2005 revenues of six billion euros with earnings before interest, tax, depreciation and amortisation (EBITDA) of 3.8 billion euros.

Its total debt is projected at 22 billion euros, or 5.8 times EBITDA.

The Benettons' Schemaventotto will hold a 24.9 percent stake in the merged group. Abertis shareholders savings bank La Caixa and building giant ACS will hold 11.7 percent and 12.5 percent of the new company, respectively.

REUTERS CS BD0913