* Will be a sizable paper component - sources
* Cash outlay could be less than 700 mln euros - sources
* Deal worth around 1.1 bln euros at current market prices
* Shareholders could vote on merger by end-April - sources
By Stefano Bernabei
ROME, Jan 10 Italian motorway group Atlantia's
planned takeover of Gemina, which controls
Rome airport operator ADR, will include a sizable stock
component as well as cash, sources close to the matter said on
The deal, worth around 1.1 billion euros ($1.5 billion) at
current market prices, would help ADR on a multi billion-euro
investment plan to relaunch its flagship Fiumicino airport by
giving it better access to capital markets.
Atlantia and Gemina, both controlled by the Benetton
family's holding Sintonia, said on Wednesday they were in talks
to merge following months of speculation about a possible
"There will certainly be a sizeable paper component, not
just cash, to lower the risk of a (negative credit) rating
impact," one of the sources said, asking not to be named.
The sources said that based on a value for Gemina of around
1.2 euros per share, as indicated by several analysts, the cash
outlay for Atlantia would be less than 700 million euros.
Sintonia would not tender its Gemina shares in any Atlantia
offer, sources said earlier on Thursday.
Atlantia saw its shares falling as much as 4 percent on
Thursday on worries of a larger cash outlay and came off their
lows after details over the planned bid emerged.
Shares in Gemina closed up 1 percent at 1.19 euros, having
risen more than 90 percent since talk of a possible takeover
emerged in July.
Atlantia, which has a market value of around 9.1 billion
euros, was not immediately available to comment.
The merger is not expected to endanger Atlantia's current
dividend pay-out policy, the sources said, adding the aim was to
have shareholders of both companies vote on the deal by the end
Sintonia, whose minority investors include Singapore
sovereign wealth fund GIC and Goldman Sachs,
controls about 46 percent of Atlantia and 36 percent of Gemina.
Some analysts have cast doubt over whether the deal makes
much strategic sense for Atlantia which has previously indicated
a strategy of expansion in less mature markets.
"In our view there are no relevant operating synergies
between both concession operators," UBS said in a note.
The broker added however the lower cost of debt for Gemina
could create some value, justifying a premium.
Moody's this week placed its Ba2 junk rating on ADR under
review for an upgrade to reflect a new regulatory framework that
will allow tariff hikes over the coming years.
The planned expansion of Fiumicino - which sees 12 billion
euros of investment by 2044 including 2.5 billion in the next 10
years - would bring the airport more into line with
international hubs in Madrid, London and Singapore.
By acquiring Gemina, Atlantia would become more similar to
large competitors like Vinci, Ferrovial or
Abertis which have both motorway and airport assets.
Atlantia unit Pavimental could also obtain up to 40 percent
of the work to expand Fiumicino, a source close to the deal has