The end of Benetton control over Italy’s motorways is in sight. Atlantia, 30%-owned by the jumpers-to-infrastructure dynasty, looks set to sell its controlling stake in the country’s largest toll road operator to a consortium led by state investor Cassa Depositi e Prestiti for 9.1 billion euros. It’s not a rich price, but the deal will put an end to years of squabbling and should cut Atlantia’s 39 billion euro debt burden.
Drained by a long-standing dispute with the government over the 2018 collapse of a Genoa bridge, Atlantia on Monday abandoned plans to spin off its motorway unit, Autostrade per L’Italia (ASPI). That leaves a sale to the CDP-led consortium, which sweetened its offer on Wednesday, as the only option. The previous government had threatened to revoke the group’s license if a sale could not be agreed.
The likely 9.1 billion euro price tag for ASPI’s equity is a far cry from a 14.8 billion euro valuation implied by a minority stake sale in 2017. Hedge fund TCI has argued the business is worth up to 12 billion euros. Still, with the political dispute unresolved, a bidding war for ASPI was always unlikely. Moreover, the unit’s valuation has suffered as it, under pressure from Rome, pledged to invest 14.5 billion euros, and the pandemic hit traffic volumes.
That also means the new owners CDP, Blackstone and Macquarie are unlikely to make hefty returns. The sale values ASPI at 18.8 billion euros including expected 2021 net debt, or 10 times forward EBITDA. Assume ASPI’s revenue rebounds this year to 3.5 billion euros, and the new owners can continue to grow it by 1% each year, while pushing up the EBITDA margin to perhaps 70%, up from 62% in 2017, before the bridge collapse. A sale at the same multiple in 2028 would value ASPI’s equity at 16 billion euros, and generate a nearly 9% internal rate of return, according to a Breakingviews calculation. That assumes debt stays flat, as higher investments limit any deleveraging.
The sale will limit any further legal threats for Atlantia, whose shares have lost around a third of their value since the Genoa tragedy. And it should cut debt, last year over 10 times EBITDA, by at least 17 billion euros, Fidentiis estimates. At the very least, by getting rid of the motorway unit, the Benettons should avoid a worse car crash.