UPDATE 1-Bilfinger shares climb on plan to sell PPP unit

Tue May 28, 2013 8:09am EDT

Related Topics

* Sale of Concessions after downsizing of construction unit

* Aims to focus on industrial services, maintenance

* Started talks with interested parties

* Shares reach 7-week high, top MDax (Adds company, analyst comment, details)

By Peter Dinkloh

FRANKFURT, May 28 (Reuters) - Bilfinger shares rose on Tuesday after the German firm said it would sell a division that operates public-private partnerships, part of its shift from construction-based projects to more predictable industrial services and maintenance work.

The group's shares rose 4 percent to 81 euros, their highest level in almost seven weeks and topping Germany's midcap index after the announcement late on Monday.

"It's not a business that's relevant for the whole group and exiting everything that's risky makes investors happy," said Equinet analyst Ingbert Faust.

"The sale is a strategically good decision," he said.

As with the sale of rival Hochtief's airport unit, buyers for Bilfinger's Concessions unit could range from other construction groups to infrastructure funds and financial investors.

While the public-private partnerships of the Concessions unit offer fee-based income from reliable partners like cities, the division suffered after Bilfinger reduced its construction unit that executed some of the orders. That led to lower profitability and fewer capabilities, Bilfinger said on Tuesday.

"The sale is a consequence of the fact that we abandoned our construction activities in so many countries," a spokesman said. "If you no longer have the synergies between the building business and Concessions, why would you need such as solitary unit that's got little to do with the rest of the company?"

Bilfinger has mandated Rothschild to help with the sale and is already in talks with parties interested in the business, the spokesman added, declining to give more details.

The unit made earnings before interest, taxes and amortisation (EBITA) of 41 million euros in 2012, thanks to a 52 million gain from the sale of projects to an infrastructure fund, compared with group EBITA of 466 million euros.

The Concessions unit builds and operates roads in countries including Canada and Britain, as well as a prison in Australia.

Brokerage Natixis raised its stance on Bilfinger shares to "buy" from "neutral" and increased its price target to 86 euros from 85 euros.

($1 = 0.7729 euros) (Editing by Mark Potter)

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