UPDATE 1-Italian builder Salini backs plan to buy Astaldi to spur industry

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MILAN (Reuters) – Italy’s biggest builder Salini Impregilo (SALI.MI) has decided to go ahead with a takeover of stricken rival Astaldi (AST.MI), kickstarting a state-backed plan to revive the country’s moribund construction industry.

FILE PHOTO: People work at the construction site of a new residential building on the outskirts of Rome, Italy September 24, 2018. REUTERS/Tony Gentile/File Photo

Salini said it would invest 225 million euros ($253 million) in Astaldi, currently in bankruptcy proceedings, in return for a controlling stake, part of a bigger 1.8 billion euros financing plan designed to create a new national champion.

The rounds of funding include a 600 million euro share issue by Salini.

Salini wants to be the cornerstone of an industry consolidation, using a takeover of Astaldi and subsequent mergers to create a business capable of competing head-on against global firms for major projects at home and abroad.

Salini said in a statement late Monday its offer for Astaldi was conditional on receiving funding commitments for the plan by Aug. 1 from state lender Cassa Depositi e Prestiti (CDP) and from a group of commercial banks.

CDP and the banks, including Italian lenders Intesa Sanpaolo (ISP.MI) and UniCredit (CRDI.MI) and France’s BNP Paribas (BNPP.PA), have already written letters expressing non-binding support for the overall plan, the statement said.

Salini said CDP would take 250 million euros of its share offering. Salini’s major shareholder Salini Costruttori would take 50 million euros and financial institutions 150 million euros, with the rest to be underwritten by banks including global coordinators Merrill Lynch and Citibank.

In addition to the 600 million euros in new shares, Salini said the project would be supported by various lines of credit worth a total of 984 million euros.

Salini has said a variety of funding would be needed pull off a successful takeover of Astaldi and position the merged group to expand further.

Astaldi is Italy’s second largest builder. Salini also has heavy debt and fears a failure of Astaldi could harm its own business, given they are partners in some major projects.

Reporting by Claudia Cristoferi; Editing by Mark Bendeich and Mark Potter

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