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The owner of Italy’s largest motorway network is struggling to find the nearest exit ramp. Benetton family-owned Atlantia has agreed to sell its controlling stake in Autostrade per l’Italia following the lethal collapse of the Morandi bridge in Genoa in 2018.
A hoped-for spin-off would have created the most value for shareholders. Instead, Atlantia failed to agree a market-based solution with bidders and minority shareholders. It formally abandoned those plans on Monday when its two largest shareholders voted against extending the spin-off period.Â
The route that remains is a sale of Autostrade to investors led by state fund Cassa Depositi e Prestiti. But CDP’s offer for Atlantia’s 88 per cent in Autostrade values the group at €9.1bn, below some minority investors’ target. Chris Hohn’s The Children’s Investment Fund (TCI) has valued the stake closer to €12bn. With the weight of the state against it, achieving that looks difficult. TCI has taken on public owners and regulators in the past — for example in Japan with J-Power — with mixed results.
Italy’s government may have changed in recent months, but its attitude towards Atlantia is unlikely to have budged. The perception that Atlantia prioritised profits over safety has not passed. At the same time, there are plans for necessary investments needed to ensure the safety of the road and bridge network. Threats to revoke concessions on about half of Italy’s motorways until 2038 only added to heated political rhetoric.
Even so, new toll contracts will probably be far less profitable. Changes agreed with regulators have hit Autostrade’s sale price. These include an agreed €3.4bn settlement that will lower owner tariffs and push up capital expenditures until 2025. Returns on investment are expected to shift into the slow lane, into single digits. That looks skimpy when net debt is so high at more than 7 times forward ebitda.
Pandemic lockdowns have already reduced road traffic and hurt Autostrade’s revenues. Both are down a third last calendar year. Given that the government-backed CDP has plotted a course for Autostrade, do not expect a U-turn on the price.
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