Autostrada – the real Italian job !! (Holy Cow edition)

Holy Cow !! (pardon my French..).

After I posted last week about a potential “Italian Job” at Autostarda / SIAS with the sale of the South American activities, the real Italian job now emerged:

Autostrada just released a “breaking news item” that they intend to:

– buy in total 30% of the Italian construction company Impegrilo from it’s parent and Insurance company Fondiaria at a total amount of 237 mn EUR
– The purchase price is above the current market price of Impegrilo shares
– additionally, they want to increase their capital by up to 500 mn EUR which based on the current market cap of 620 mn EUR is a lot.

I have to admit that this is really unexpected and hard to value. In any case, it completely changes the investment case and I am inclined to directly sell the shares or exchange them into SIAS.

One thing is a little bit strange: They say that they pay above market price (3.65 EUR for the Fondriaria part and 3 EUR from the parent company) and spend 237 mn EUR in total. However, those 120 mn shares are actually worth something like 312 mn EUR at the current price of 2.66 EUR for Impgegilo.


I have just seen that Fondiaria actually issued a press release in December 2011 about the first part of the transaction:

Argo Finanziaria S.p.A., Immobiliare Fondiaria-SAI S.r.l. and Immobiliare Milano Assicurazioni S.r.l. announce the signing today of the acquisition by Argo Finanziaria S.p.A. of 8,040,000 ordinary shares of IGLI S.p.A., held by Immobiliare Fondiaria-SAI S.r.l. and Immobiliare Milano Assicurazioni S.r.l. and comprising 33.33% of the share capital of IGLI S.p.A.. As previously reported, IGLI S.p.A. in turn holds 120,576,293 Impregilo S.p.A. ordinary shares – 29.96% of the share capital with voting rights. The acquisition price of each IGLI S.p.A. share subject to the agreement was established at Euro
10.89572, based on the forecast balance sheet of IGLI S.p.A. at December 31, 2011, with each ordinary share of Impregilo S.p.A. attributed a value of Euro 3.65.
Argo Finanziaria S.p.A. may designate its subsidiary Autostrada Torino Milano S.p.A. to acquire the IGLI S.p.A. shares held by Immobiliare Fondiaria-SAI S.r.l. and Immobiliare Milano Assicurazioni S.r.l. .

So this was not exectly “brand new” news, but this potential “designation” was never mentioned anywhere on Autostrada’s website.

So let’s wait and see what the stock does tomorrow. Maybe I was the only one who did not know about this…..

Quick update: After a short suspension, the stock now trades down “after hour” at around 6,90 EUR from 7,10 earlier on the day. So I will try to sell them tomorrow with a limit of 6,75 EUR per share.

EDIT: I decided to skip the limit and sell at today’s VWAP without limit. Sell first, ask questions later….


  • I own one Italian stock and stories like this unfortunately seem too common with Italian companies.

    I think I actually fear the lack of Italian corporate governance more than the lack of shareholder rights in Japan. At least in Japan management is quite conservative, in Italy companies are run like little fiefdoms.

    The more items I read like this the more I consider just liquidating my position and watching Italy from afar for now.


    • hi nate,

      yes, those stories come up from time to time. Overall I think Italy is no worse or better than any other market. I think this is more a problem with majority owned small stocks in general.

      Sometimes those issues can create an interesting entry point (see EMAK). Howver you have to be aware of those risks and build in additional “margin of safety”.


      P.S: Italian companies have in my opinion very good disclosures, genrelly better than other European markets

  • Hi Oskar,

    yyou hit the point. My investment case was a toll road operator with some risk from the Corporate Governance side at a bargain price.

    An extremel diluted stock with a non-controlling stake in a construction company is very different.story.


    P.S.:A good lesson that there is ALWAYs a reason why a stock is cheap….

  • I was just about to post a comment on this news. If you think that AutostradaTM is a stable company at a low price you cannot be satisfied with the management issuing €500m of new share-capital (current market cap ist €602m). With a normalized PE-ratio somewhere around 10 or lower, this acquisition would have to be priced very attractively.
    Impregilo trades below book, but at a 2011 PE of around 14 (although one needs to point out that earnings were low in that year).
    I also think that a shift in strategy, which buying a construction company clearly is, is a big surprise for shareholders. On the other hand: what do you expect in companies full of former politicians that works in a highly regulated market with all the political problems typical for utilities. Not to mention the “special” shareholder-treatment in a country like Italy…….

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