Buy Abertis For A Return Between 2% And 13% In 6 Months

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Masbro Advisors


  • Abertis (BME: ABE) is a world leader in the management of toll roads and infrastructure with Eur 18bn+ market cap listed in Spain.
  • There are currently two offers from strategic players to buy Abertis.
  • Potential for a prolonged bid war.
  • Safe returns on Abertis keep you away from the markets ups and downs.

Abertis (OTC:ABFOF) (OTCPK:ABRTY) is a global toll roads operator listed in Euros in Spain. The group maintains and operates under concession contracts major highways and other toll roads infrastructure. It is present mostly in Spain, France, and South America. It has always been a dividend-play, and it is currently expected to pay 90c in dividends in 2018, which represents a 4.8% dividend yield.

Atlantia [BIT:ATL], a major Italian toll roads operator, has offered for Abertis on May 15, 2017, Eur 16.5 in cash per share or 0.697 of Special non-transferable Atlantia shares, worth Eur 18.68 today. Abertis shareholder can opt for either cash or shares.

A couple of months later, Hochtief (ETR: HOT) a German infrastructure player, has made a competing offer of Eur 18.76 in cash or 0.1281 regular, liquid, transferable shares of Hochtief, worth Eur 18.67 today. Hochtief is owned by ACS [BME: ACS] (OTCPK:ACSAF), a Spanish construction group. For soccer fans, the President and controlling shareholder of ACS is Florentino Perez, also owner of Real Madrid, the well-known football club where Ronaldo plays. Hochtief management has made it clear that their offer does not include any dividends that Abertis might pay in the future. If you add the upcoming early April dividend to this offer, the Hochtief cash option is currently worth Eur 18.67 + 0.45 = Eur 19.02. This is already above Abertis share price.

Essentially, what happened here, is that the Spanish government wasn`t too happy with a big company such as Abertis not being in Spanish hands anymore, and found a Spanish player that could put together a competing offer. JPMorgan (JPM) has been leading the financing for Hochtief.

Note that both offers are extremely accretive to EPS for both the buyers as they finance themselves with new debt with interests between 2% and 3%. Abertis

This article was written by

Masbro Advisors profile picture
arbitrageur and special sits global investor and consultant

Disclosure: I am/we are long ABERTIS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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