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Salini sees order boost with Impregilo merger
March 18, 2013 / 7:40 PM / 5 years ago

Salini sees order boost with Impregilo merger

MILAN (Reuters) - Italian builder Salini aims to net new contracts for more than 10 billion euros ($13 billion) by 2015 with the acquisition of larger peer Impregilo IPGI.MI, its chief executive said in an interview with Reuters on Monday.

Salini's Chief Executive Pietro Salini poses for photographers before the news conference in downtown Milan April 23, 2012. REUTERS/ Stefano Rellandini

Salini, which already owns a stake of just under 30 percent in Impregilo, has launched a cash takeover bid for Impregilo valuing the company at 1.6 billion euros in one of Italy’s largest M&A operations in recent years.

The plan is to merge the two companies to create a global construction player focused on large civil engineering projects from roads to hydroelectric dams in more than 60 countries.

“The challenge will be to create a multinational group capable of generating more than 10 billion (euros) in new orders by tapping the world’s huge infrastructure needs,” said Pietro Salini, who became CEO of Impregilo last summer.

The offer started on Monday and ends on April 12.

Impregilo and Salini have a combined order book of construction contracts worth around 20 billion euros, including a contract to widen the Panama canal and the giant Gibe III hydroelectric dam in Ethiopia. New orders for 10 billion euros would represent a 30 percent boost.

Salini managed to gain control of Impregilo’s board in July of last year after a bitter tussle with the construction and motorway group Gavio, which also owns just under 30 percent of the company.

The offer, which will end before the payment of a jumbo dividend of 600 million euros stemming from the sale of a stake in Brazil highways group EcoRodovias, is subject to reaching a majority stake in Impregilo. It is still unclear whether Gavio will tender its stake to the Salini offer.

“What we have offered is a very generous price. If the bid is fully successful as we hope (Impregilo) will go through a profound reorganization. The bid is an important exit opportunity (for investors),” he said.

The combined group aimed at hiring up to 20,000 new staff in the coming three years, Salini said.

To fund the acquisition, Salini has agreed a bank financing of up to 1.4 billion euros, which he said will be partly repaid with the proceeds of the special dividend.

Salini said the combined group’s earnings, possible asset disposals and expected 100 million euro cost and revenue synergies would make its debt pile sustainable.

He said Impregilo-Salini would have earnings before interest, tax, depreciation and amortization (EBITDA) of around 500 million euros in 2013.

Salini said he did not plan to delist Impregilo but said such a move could become an option if Gavio did not tender its stake or Salini ended up with more than 90 percent of the holding.

Analysts expect Gavio to tender its stake. The takeover would allow the Gavio group to cash in 480 million euros and book a capital gain of about 70 million euros to focus on its other businesses, they said.

Editing by Carol Bishopric

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