European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

ACS, Actividades de Construcción y Servicios / Event-Driven

ACS, Actividades de Construcción y Servicios

<ul>
<li>ACS is simplifying  its corporate structure: it has acquired the minorities in CIMIC, increased its stake in Hochtief and is buyer for any shares in Hochtief owned by Atlantia.</li>
<li>Thiess is now acquiring MACA and could also be a candidate for acquisition by the parent.</li>
<li>I see value in ACS. Further rationalisation in the holding structure would be a catalyst for the reduction of the discount.</li>
</ul>


ACS is simplifying  its corporate structure: it has acquired the minorities in CIMIC, increased its stake in Hochtief and is buyer for any shares in Hochtief owned by Atlantia.
Thiess is now acquiring MACA and could also be a candidate for acquisition by the parent.
I see value in ACS. Further rationalisation in the holding structure would be a catalyst for the reduction of the discount.


<ul>
<li>Thiess is launching an agreed offer to acquire 100% of <a href="https://www.smartkarma.com/entities/maca-ltd" target="_blank" data-smartkarma-citation="entities:11390:1" rel="noopener">MACA Ltd (MLD AU)</a> at AUD 1.025/share, in cash, cum dividend, a 28% premium, 2.8x EV/Fwd EBITDA. Minimum acceptance condition is 90%.</li>
<li>Thiess is gaining scale with the acquisition of MACA. I believe that in the future ACS/Hochtief/CIMIC will seek to acquire the whole of Thiess.</li>
<li>Gross spread (as of 29 July) is 2.43%, for a deal with high chances to complete. I would be long at this price.</li>
</ul>


Thiess is launching an agreed offer to acquire 100% of MACA Ltd (MLD AU) at AUD 1.025/share, in cash, cum dividend, a 28% premium, 2.8x EV/Fwd EBITDA. Minimum acceptance condition is 90%.
Thiess is gaining scale with the acquisition of MACA. I believe that in the future ACS/Hochtief/CIMIC will seek to acquire the whole of Thiess.
Gross spread (as of 29 July) is 2.43%, for a deal with high chances to complete. I would be long at this price.


<ul>
<li>GIP/Brookfield/ACS weigh launching a €15 billion unsolicited offer for Atlantia. Blackstone may partner with the Benettons to acquire Atlantia at €24/share (26% premium ). Italian Government's role will be key.</li>
<li>Atlantia trades at higher multiples than ACS (EV/22e EBITDA: 12.8x vs 3.2x, Capital IQ consensus). A hypothetical ACS/Abertis would become a world leader in infrastructure, but leverage is key. </li>
<li>The opposition of Edizione makes the operation difficult/more expensive. A joint-bid Edizione/Blackstone, would force the GIP-led group to present an improved offer. Nearly 50% of Atlantia's NAV is cash.</li>
</ul>


GIP/Brookfield/ACS weigh launching a €15 billion unsolicited offer for Atlantia. Blackstone may partner with the Benettons to acquire Atlantia at €24/share (26% premium ). Italian Government's role will be key.
Atlantia trades at higher multiples than ACS (EV/22e EBITDA: 12.8x vs 3.2x, Capital IQ consensus). A hypothetical ACS/Abertis would become a world leader in infrastructure, but leverage is key. 
The opposition of Edizione makes the operation difficult/more expensive. A joint-bid Edizione/Blackstone, would force the GIP-led group to present an improved offer. Nearly 50% of Atlantia's NAV is cash.


Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>On the 23 February, <a href="https://www.smartkarma.com/entities/acs-actividades-de-construccion-y-servicios" target="_blank" data-smartkarma-citation="entities:21242:1" rel="noopener">Actividades de Construcción y Servicios (ACS SM)</a>, via 52.3%-held <a href="https://www.smartkarma.com/entities/hochtief-ag" target="_blank" data-smartkarma-citation="entities:21652:1" rel="noopener">Hochtief AG (HOT GR)</a> offered $22/share for all <a href="https://www.smartkarma.com/entities/cimic-group-ltd" target="_blank" data-smartkarma-citation="entities:20030:1" rel="noopener">CIMIC (CIM AU)</a> shares it does not own. </li>
<li>The Independent Expert (Grant Thornton) has assessed the Offer and concluded it to be fair and reasonable.</li>
<li>The Offer is unconditional. The close of the Offer, unless extended, is the 11 April.</li>
</ul>


On the 23 February, Actividades de Construcción y Servicios (ACS SM), via 52.3%-held Hochtief AG (HOT GR) offered $22/share for all CIMIC (CIM AU) shares it does not own. 
The Independent Expert (Grant Thornton) has assessed the Offer and concluded it to be fair and reasonable.
The Offer is unconditional. The close of the Offer, unless extended, is the 11 April.


IE Says Fair And Reasonable In CIMIC's Target Statement

<ul>
<li>Hochtief offers A$22/share in cash, a 33% premium to the closing share price on the prior day, and the offer is final. The offer is a relatively low amount.</li>
<li>The deal should complete. The premium is generous, as the 15.4x P/22e E paid is high given that Hochtief and ACS are trading at 9.9x and 11.3x, respectively.</li>
<li>ACS trades at 27% discount to NAV. Holding structure rationalization and c. €5 billion received should be a catalyst for discount tightening. Long 1 ACS SM/short 0.4162 HOT GR.</li>
</ul>


Hochtief offers A$22/share in cash, a 33% premium to the closing share price on the prior day, and the offer is final. The offer is a relatively low amount.
The deal should complete. The premium is generous, as the 15.4x P/22e E paid is high given that Hochtief and ACS are trading at 9.9x and 11.3x, respectively.
ACS trades at 27% discount to NAV. Holding structure rationalization and c. €5 billion received should be a catalyst for discount tightening. Long 1 ACS SM/short 0.4162 HOT GR.


ACS/Hochtief/CIMIC: Rationalization of Holding Structure

Spain

Fomento de Construcciones y Contratas S.A. (FCC) offers construction services and manufactures building materials.  The Company offers civil engineering services, constructs housing and commercial buildings, roads, and other infrastructure projects, develops real estate, collects, treats, and disposes of solid waste, markets street cleaning machines, and produces cement.

Fomento De Construcciones Y Contratas (FCC SM)

Sacyr S.A. offers construction services, operates concessions and develops and rents real estate in Spain.  The Company develops housing, office buildings, factories, shopping malls, hotels and retirement homes, offers building maintenance services, and administers and markets real estate.

Elecnor, S.A. generates, transmits, and distributes electrical power and gas. The Company also engineers, constructs and installs power lines and pipelines for the electrical power, water and gas, railroad and telecommunications industries. Elecnor operates in Spain, Portugal, Argentina, Ecuador, Peru, Venezuela, Brazil, Mexico, and Morocco.

Ferrovial SA is an infrastructure operator and industrial company. The Company operates in multiple countries in a range of sectors including construction, airport, toll road, and municipal services.  Ferrovial SA also has a services division in which they provide facility management, infrastructure maintenance and upkeep, and energy and waste management services.

Obrascon Huarte Lain, S.A. is a construction and engineering company. The Company builds highways, waterworks, civil engineering projects, residential housing and public buildings.  Obrascon also offers public works maintenance and water management services.

Siemens Gamesa Renewable Energy, S.A. designs and manufactures renewable energy equipment. The Company offers wind turbines, turbine gearboxes, offgrid, and other related equipment, as well as provides maintenance and reconditioning services. Siemens Gamesa Renewable Energy serves industrial facility management, automotive industry, and new technology development worldwide.

Siemens Gamesa Renewable Energy, S.A. (SGRE SM)

Construcciones y Auxiliar de Ferrocarriles SA manufactures railroad cars and components, as well as complete turnkey transportation systems. Exports are increasingly important to the Company, with customers in the UK, Finland, Poland Hong Kong, Brazil and elsewhere. Domestically, the Company has, and will, supply rolling stock to the Madrid and Bilbao subway systems.

Construcciones Y Auxiliar De Ferrocarriles SA (CAF SM)

Construcciones Y Auxiliar De Ferrocarriles SA

Talgo S.A. is a Spain-based specialized rolling stock engineering company focused on the designing, manufacturing and servicing of lightweight trains.

Compania de Distribucion Integral Logista Holdings, S.A. operates as an international logistical solution provider. The Company offers logistics, parcel and express courier transport, industrial parcel transport, and long distance and full truck load transport management services.

Applus Services, S.A. provides certification services. The Company offers consultancy, engineering, inspection, non-destructive testing, technical assistance, and type approval.

China Railway Group Ltd. offers transportation systems construction services. The Company builds railroads, roads, tunnels, and bridges.

China Communications Construction Company Ltd. is a transportation infrastructure group.  The Company is involved in infrastructure construction, infrastructure design, dredging, and port machinery manufacturing.  China Communications has operations worldwide.

China Communications Construction (1800 HK)

GMR Infrastructure is an infrastructure company with interests in airports, power and roads. The Company is developing a greenfield international airport at Hyderabad, and is also operating, managing and developing the Delhi airport. Additionally, it is involved in development and operation of power plants and road projects in India.

OBAYASHI CORPORATION is a general contractor operating nationwide and overseas. The Company builds commercial, residential, institutional buildings with earthquake-resistant technology.  Obayashi also performs civil engineering works for such as railroads.  The Company, through its subsidiaries, operates real estate, golf course, and financial businesses.

Fluor Corporation is a professional services company. The Company provides engineering, procurement, construction and maintenance as well as project management services on a global basis. Fluor also provides outsourcing of maintenance services and asset operations, equipment rental and sales, business support services, and other services.

KBR, Inc. is a global engineering, construction, and services company supporting the energy, petrochemicals, government services, and civil infrastructure sectors.  The Company offers a wide range of services through two business segments, Energy and Chemicals (E&C) and Government and Infrastructure (G&I).

KAJIMA CORPORATION is a general contractor operating nationwide and overseas. The Company builds commercial, residential, and institutional buildings with high-rise and earthquake-resistant construction technology.  Kajima also performs large scale civil engineering works such as nuclear power plants. The Company operates real estate and office automation equipment businesses.

Comfort Systems USA, Inc. provides heating, ventilation, and air conditioning system installation, maintenance, repair, and replacement services. The Company's commercial and industrial markets include office buildings, retail centers, apartment complexes, hotels, manufacturing plants, and government facilities.

MasTec, Inc. is a specialty contractor operating across a range of industries. The Company activities are the building, installation, maintenance, and upgrade of utility and communications infrastructure, including electrical utility transmission and distribution, wind farms, solar farms, renewable energy and natural gas infrastructure, wireless, and wireline.

TAISEI CORPORATION is a general contractor operating nationwide and overseas. The Company builds residential, commercial, and institutional buildings such as condominiums and single-family houses.  Taisei also performs civil engineering works for roads.  The Company, through its subsidiaries, operates real estate, resort development, and financial businesses.

ACS, Actividades de Construccion y Servicios, S.A. is an engineering and contracting company that develops civil and industrial infrastructures. The Company provides Civil Works Construction, Greenfield Concession Development, Industrial Services (electricity, oil and gas) and Environmental Services (waste treatment and facility management).

ACS, Actividades de Construcción y Servicios (ACS SM)

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ACS, Actividades de Construcción y Servicios (ACS SM)

Untangling ACS Holding Chain

Catalysts for the reduction of the discount would be increases in the Hochtief stake, direct ownership by ACS of the 50% of Abertis into the...

Jesus Rodriguez Aguilar

ACS/Thiess/MACA: Generous Premium

Thiess is offering AUD 1.025/share, in cash, cum dividend. The Board of MACA unanimously recommends accepting the offer in the absence of a...

Jesus Rodriguez Aguilar

Atlantia in Play?

The GIP/Brookfield/ACS deal seems a priori difficult, due to the size of Atlantia (for ACS) but above all because of the possibility that the...

Jesus Rodriguez Aguilar

IE Says Fair And Reasonable In CIMIC's Target Statement

This is done and trading to terms given Hochtief's right to exercise on-market purchases. Separately, Hochtief appears "cheap" relative to its...

David Blennerhassett

ACS/Hochtief/CIMIC: Rationalization of Holding Structure

The offer is well timed, as CIMIC shares had been trading at seven-year lows prior to the offer. Gross spread is nearly inexistent, but worth...

Jesus Rodriguez Aguilar

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