Sacyr launches bid for Eiffage

20 March 2008

Sacyr Has Launched An All Share Bid To Fully Acquire France's third largest contractor Eiffage. Sacyr already owns 33% of Eiffage, and is offering € 6,5 billion worth of its own shares for the remainder. If the deal is successful, the merged company would have annual sales of about € 15 billion, making it the fifth largest contractor in Europe.

However, the bid has been rejected by Eiffage's Board. The two companies have been hostile for months principally over Sacyr's attempts to nominate five members of the 13-strong French company's Board. Eiffage has consistently refused to give Sacyr seats, despite the Spanish group being its largest shareholder.

Matters came to a head on April 18 at Eiffage's Annual General Meeting (AGM) when Sacyr once again failed to secure any seats on the board. The AGM also saw Eiffage suspend the voting rights of 89 other Spanish minority shareholders, holding about 20% of the company, on the grounds that they were suspected of colluding with Sacyr. Although the validity of this cancellation is questionable, if the unofficial ‘consortium' of Spanish owners does exist it would contravene stock market rules and could jeopardise Sacyr's bid. It looks likely that the two companies will go to court to settle this particular dispute.

The run-up to the AGM had seen tensions escalate between the two groups. Eiffage, which is 23% owned by its employees, temporarily put a block on employee share dealings apparently in an attempt to prevent Sacyr gaining a greater holding. Sacyr's previous tactic had been to keep its ownership of Eiffage just under the 33,3% mark. If it had exceeded this, it would have been obliged to launch a take-over offer, which it had previously said was not its intention.

The persistent take-over speculation surrounding Eiffage has seen its shares rise more than +50% since mid-March.

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