Sacyr would keep 20-25 pct of Eiffage listed in Paris on bid completion UPDATE

Sacyr would keep 20-25 pct of Eiffage listed in Paris on bid completion UPDATE

	Published : Thu, 19 Apr 2007 13:41 By : Agencies Print this Story

(updates with further quotes from executives)

MADRID (Thomson Financial) - Sacyr Vallehermoso SA is targeting a free float of 20-25 pct for Eiffage on the French stock market once its takeover bid, which values the company at around 9.7 bln eur, is completed, management said in a conference call in Paris.

This compares with a current free float of about 29.4 pct.

Sacyr has set a minimum acceptance threshold for the offer to go ahead at 60 pct of capital and chief executive Luis del Rivero said that if it obtains 'say 80 pct, the rest can stay on the market.'

He said that it would be in the event of 100 pct acceptances that Sacyr would then re-list the 20-25 pct tranche mentioned on the Paris market.

Earlier, the Spanish builder announced an all-share bid for its French rival, which is set to begin May 9 and run till end-July.

The bid surprised the market this morning after yesterday's ill-tempered Eiffage AGM where Sacyr failed to obtain the third of board seats it was seeking and where 89 small Spanish shareholders had their voting rights cancelled by Eiffage, which accused them of colluding to aid Sacyr.

Eiffage's AGM also agreed to a poison-pill measure allowing it to fend off a hostile bid by issuing warrants convertible into enough shares to swell the group's capital by 40 pct.

Del Rivero said if Eiffage were to attempt such a move it would require a second AGM vote to confirm the authorisation of the measure and that if such a confirmation was passed, Sacyr could withdraw its bid entirely.

Sacyr is offering 12 of its own shares for every five Eiffage securities.

Management said Sacyr plans to seek approval from shareholders at the end of June at the latest for its planned 149.1 mln share capital hike to facilitate the deal.

The executives stressed that there are no plans to cut jobs after the takeover and that they want major investors, including Eiffage management and employee shareholder blocs and state-owned bank Caisse des Depots et des Consignations (CDC), to know that Sacyr's intentions have 'never been hostile.'

Ana de Pro, Sacyr's corporate development managing director, said 'we want a French company with French management, a French chairman that is quoted the French stock market.'

Just three days before France's presidential elections, some analysts have observed that a foreign takeover of a business that in an earlier guise built the Eiffel Tower in Paris could become a sensitive issue.

De Pro said: 'If we do not manage to get the 60 pct threshold, we have various alternatives: we can quit the situation, we can sell up, we can wait, we will see what happens.'

In the event of a counter-bid by a white knight, de Pro said 'we will study our options.'

But asked if he would consider sweetening the offer with a cash element funded by the sale of Sacyr's stake in Repsol YPF SA, de Rivero said such a move is out of the question and that Repsol has 'nothing to do with' the matter.

Speculation has been rife that Sacyr might consider selling its stake in the Spanish-Argentine oil and gas company to fund its expansion plans in France.

De Rivero also said there are no plans to buy out minorities in Eiffage's APRR toll-road unit.

Both executives stressed that Sacyr and Eiffage are very 'complementary,' as both have a very solid international presence.

The deal is an 'ambitious industrial project,' being the first cross-border construction merger in Europe, and there is 'potential to add value in the medium-term,' they noted.

De Pro said she does not expect the deal as its stands to prompt any EU competition objections.

Analysts have noted, however, that at current prices the constructor would make capital losses of some 600 mln eur on the stake sale.

To the question why launch an offer while legal action is pending over the AGM controversy, de Pro said Sacyr's board was last night faced with three options: are main patient and keep the stake, sell or launch the bid.'

She said that the group had originally considered setting a minimum acceptance threshold at two-thirds of capital but had decided against this as it wants to 'bring the other shareholders along with it and include everyone in the offer.'

The combined French shareholding in Eiffage is around 40 pct and she said that, with this lower threshold, French investors have the option of maintaining the status quo.

'If we can't convince the executives, the employees and CDC, they can still be involved as they are now.'

According to data on Eiffage's website, employees currently hold 22.4 pct of stock, the Eiffaime executives' shareholding vehicle 5 pct and CDC 8.5 pct.

Del Rivero said he is 'confident' the bid will succeed and that the combination will create 'strong synergies' and will be the second-largest toll-road operator in the world.

He said the two groups curently have pro forma sales of 15.43 bln eur and gross operating profit of 2.686 bln, to which 2.686 bln eur in sales would be added by a merger.

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