Building value

23 March 2007 By Pierre Briancon

The French construction group has done the right thing for shareholders by fending off the advances of Spain’s Sacyr. Now it needs more. Rival Vinci also has an unsolicited shareholder to deal with. A merger of the two could make sense if it s not purely defensive.

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Shares of Eiffage, the E9bn construction group and highway operator, are up 34% this week on rumours that Sacyr, the Spanish constructor which has built up a 32% stake in its French rival, might launch a full bid for the company.

Sacyr Thursday denied it was considering such a bid. It will however ask again for four seats on the board of Eiffage at the company's annual meeting April 18. JeanFrancois Roverato, Eiffage's chairman and chief executive, has consistently rebuffed Sacyr's requests for board representation, ever since it started acquiring shares in early 2006.

Shares of Vinci, Eiffage's E27bn bigger rival, have also soared this year on the stakebuilding of Francois Pinault, the French billionaire founder of luxury group PPR. Pinault now owns 5% of the company and may be increasing his stake, according to press reports.

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