Toll booths are seen on a toll road operated by Abertis near Barcelona -- REUTERS
DUESSELDORF/MILAN - 18 October 2017:German builder Hochtief, controlled by Spain's ACS, made a 17.1 billion euro ($20.1 billion) bid for Spanish toll road operator Abertis on Wednesday, topping a rival offer from Italy's Atlantia.
Hochtief is offering 18.76 euros in cash, or 0.1281 Hochtief shares, for each Abertis share and has set a minimum acceptance threshold of 50 percent plus one share.
Builder ACS is launching the bid via cash-positive Hochtief to protect its credit rating and avoid having to raise equity itself, though Hochtief's plan to issue up to 24.8 million shares would dilute ACS's 72 percent stake in the German firm.
The move creates a dilemma for Abertis, which has also received a cash and shares offer from Atlantia worth around 15.7 billion euros on a comparable basis, according to analysts.
A tie-up between Atlantia, controlled by the Benetton family, and Abertis would create the world's biggest toll-roads operator and help both companies in their drive to branch out from their home markets.
However, a source close to ACS - whose chairman Florentino Perez also heads Real Madrid soccer club - has told Reuters that its bid has the backing of the Spanish government, which may be reluctant to see Abertis's politically sensitive motorways concessions in Spain fall into foreign hands.
A previous deal between Atlantia and Abertis fell through in 2006 due to opposition from the Italian government.
Atlantia launched its cash and shares bid in May, and people familiar with the matter told Reuters last week it was prepared to raise it if ACS - as expected - triggered a takeover battle.
"Hochtief's offer is very competitive, but we would expect Atlantia to fight for Abertis as this is a once in a lifetime opportunity," a Milan-based trader said.
At 1430 GMT, Abertis shares were up 7.1 percent at 18.89 euros. ACS's were up 4.6 percent at 32.88 euros, Hochtief's up 2.5 percent at 153.3 euros and Atlantia's down 1.4 percent at 26.86 euros.
Hochtief said Abertis would complement its business by adding the operation and maintenance of infrastructure to its developing and building operations, allowing it to "generate value throughout the entire infrastructure project life cycle."
Hochtief has secured financing of 15 billion euros at a 2 percent interest rate and is planning to pay out up to 90 percent of its profit to shareholders after a successful Abertis bid, it said.
Atlantia's bid has cleared all regulators and, according to two Italian sources, has the non-binding backing of investors representing more than 50 percent of Abertis's capital.
But one of the sources said Abertis' top investor, Criteria Caixa - the financial arm of a politically connected and powerful banking foundation - had not committed to taking up Atlantia's offer. Criteria has a 22.3 percent stake in Abertis.
Hochtief's bid puts Atlantia's offer, which began on Oct. 10 and was due to run through Oct. 24, on hold. Spanish market watchdog CNMV now has to examine Hochtief's offer and decide whether it can go ahead.