Shares of Spanish engineering and infrastructure group ACS surged 16% on Friday after French rival Vinci made a non-binding offer to buy ACS's industrial unit Cobra for 5.2 billion euros ($6.10 billion).
ACS’s board will proceed with negotiations, the Madrid-based company said in a filing to the stock market regulator.
Vinci has offered to pay at least 2.8 billion euros ($3.28 billion) in cash and the rest in Vinci shares, the filing said. Vinci shares were up 2% after the news.
“Our view is that this process will create value and be good for (ACS) shareholders,” analysts at Alantra Equities said in a note, acknowledging that Vinci’s offer valued Cobra 50% higher than Alantra’s own estimates, making ACS a strong “buy”.
Cobra - whose business covers engineering and public works activities, renewable energy projects and concession contracts - booked sales worth 6.3 billion euros in 2019.
The Alantra analysts said its divestment would leave ACS with a less diversified business.
Angel Perez Llamazares, an analyst at Spain’s Renta4Banco, said Cobra would be a good long-term asset for ACS to keep given its high revenues and strong portfolio of green energy contracts, although a sale would also have advantages.
ACS reported a sharp fall in first-half profit in August and has booked losses at its Australian subsidiary CIMIC.
“In theory we consider the cash inflow (from a Cobra sale) positive, helping to mitigate the impact of the pandemic on [ACS] group’s balance sheet and the problems registered in certain subsidiaries,” Llamazares said.
($1 = 0.8538 euros)
Additional reporting by Jesus Aguado; writing by Clara-Laeila Laudette; Editing by Ingrid Melander and Susan Fenton