Salini spells out Impregilo merger plan

MILAN Mon Apr 23, 2012 2:01pm EDT

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MILAN (Reuters) - Italian builder Salini expects a possible merger with listed rival Impregilo IPGI.MI to create a national champion with sales of around $9.2 billion in 2015, its chief executive said on Monday, pointing to a special dividend if the plan succeeds.

Family-owned Salini, which posted 2011 revenue of 1.4 billion euros ($1.8 billion), has grown in recent years via acquisitions and expansion in markets such as Ethiopia, Kazakhstan, Nigeria and, recently, Denmark.

It wants to take over Impregilo to gain scale and better compete for big infrastructure projects.

In a bid to focus on the construction business, its plan envisages assets sales for Impregilo, including Brazilian motorway operator EcoRodovias (ECOR3.SA) which the Italian builder jointly controls with Brazilian family Almeida.

"Salini wants to continue to grow. We have the resources, the people and the determination to do so," chief executive Pietro Salini told a news conference.

"Today Impregilo is not focusing on its core business. We want to free up resources ... in order to invest in construction and reward shareholders."

The CEO said Salini was thinking of paying an extraordinary dividend if its targets were met but declined to give any details on the size of the possible payout.

Impregilo has a market capitalization of about $1.6 billion, just above the $1.4 billion market value of its 29 percent stake in the Brazilian motorway operator.

Salini said it planned also to sell Impregilo's Fisia and Fisia Babcock engineering units, which make incinerators and desalinization plants.

CONSTRUCTION SYNERGIES

Salini's ambitions to take over Italy's biggest builder are opposed by Italy's Gavio family, which controls Impregilo with a 29.9 percent stake held through Italian toll road operator Autostrada Torino Milano (ATMI.MI). The Gavios are supported by powerful banks Mediobanca (MDBI.MI) and UniCredit (CRDI.MI).

The battle of Salini against Gavio, often depicted also as a fight against Italy's financial establishment, is mostly about strategy and a different geographic focus.

Salini wants to turn the group into a pure construction player targeting Africa and Asia with only a greenfield concession business, while the Gavios want to continue to focus on both its construction and concession businesses in Italy and South America.

Salini expects a merger with Impregilo to generate recurring synergies of more than 100 million euros from 2015 in terms of core earnings. Combined revenues are seen at between 6.5 billion and 7.5 billion euros in 2015 and core earnings at 0.80-1.05 billion euros.

Salini currently owns around 25 percent of Impregilo. Impregilo shares have nearly doubled in value since September when Salini started building its stake.

Neither Salini nor Gavio have ruled out a takeover bid as an extreme option to protect their interests, but Salini will likely first attempt to convince minority shareholders and win board control at a shareholder meeting.

The battle has attracted interest from foreign investors, such as activist fund manager Amber Capital and Alaska-based investment manager McKinley Capital Management.

Impregilo, which unveils its own business plan on Thursday, has not yet announced when it will call a shareholder meeting to vote on a request by Salini to renew the entire board.

($1 = 0.7619 euro)

(Reporting by Danilo Masoni; Editing by David Cowell)

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