EUR 200.00 For Business Accounts Only

ACS: CONCLUSIONS FROM PRESENTATION OF INDUSTRIAL SERVICES SALE (ANÁLISIS BANCO SABADELL)

Highlights from the conference call on the sale of Industrial Services (Cobra):
 Industrial Services business not transferred: Outside the scope of the deal is Zero-E and another 15 concessions, which the company estimates could have a net market value of € 1.4 Bn. Our T.P. includes a valuation of €~950 M for these assets, and thus in principle the valuation provided by the company would mean around +5% on the T.P.
 Earmarking of the funds obtained: Of the total of between € 4.93 Bn and € 4.98 Bn cash at the deal’s closing, most will go towards motorway concessions and the rest towards renewable energy (through the announced JV with Vinci). Under no circumstances does the company expect to raise its stake in Hochtief (currently 50.4%) or CIMIC 8~90% Hochtief), nor does it expect the deal to have a fiscal impact on its accounts.
 ASPI (Atlantia’s infra assets held for sale): The company reiterates that it will study a possible move on ASPI (88% Atlantia), although it has hinted (nothing specified) that it could in some way be carried out through Abertis (40% ACS net of minority interests), but always in accordance with the Italian Govt. Logically, the value this possible deal would generate will depend on the asset’s final valuation (Atlantia’s target is € 11 Bn for 100% equity, according to the press) and the deal’s structure. In any event, we understand that the deal would under no circumstances mean ACS would fully consolidate the company.
 Reduction to Group complexity: The company stresses that the current complexity of the group and the businesses would be simplified, although as we have mentioned, ACS rules out snapping up the minority stakes in CIMIC and Hochtief. Thus, this could mean a reorganisation of the stake in Abertis (which ACS currently controls through the 20% held by Hochtief plus the 30% direct stake held by the ACS parent company), although no specific details have been given, and this could come within the framework of the possible deal with ASPI.
 Extraordinary dividend ruled out: The company states that the funds received in the deal will not be paid out to shareholders, but rather they will be reinvested according to the strategy outlines (in line with previous statements).
MARKET IMPACT
The messages conveyed do not add anything new to what was already made known in the FY2020 results presentation, except that an extraordinary DPS has been ruled out, and that more emphasis has been put on a possible deal with ASPI and Abertis. However, regarding this last point, no specific details have been given, and there are many possibilities (all of which would have to be approved by the Italian Govt.). As for the value of the Industrial Services assets that will remain in ACS’s scope of consolidation, the valuation is not very different to the one given previously. The impact on our current valuation from the sale of Industrial Services is +5% (which we include in our T.P., which rises to € 31.30/sh.), to which we would potentially have to add the valuation given by the company of the assets remaining in the group (which would mean another +5% to € 32.50/sh., although for the time being we do not include this), but future deals will be key to assessing the potential value generated by reinvesting the funds.