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Autostrade Shareholders to Vote on Troubled Merger

Shareholders of the Italian highway operator Autostrade SpA were meeting Wednesday to vote on a component of its merger with the Spanish company Abertis, with analysts saying the deal was likely to founder _ at least for the moment.

The US$14.7 billion deal to create the world's largest highway operator has faced a series of political and bureaucratic roadblocks since it was announced last April, just as Premier Romano Prodi's government was forming.

Facing European Union scrutiny, the government has pledged to revoke a provision limiting a construction company's stake in an Italian highway operator to 5 percent. The limit would have scuttled the deal because Spain's largest construction company, Actividades de Construccion y Servicios SA, would have a 12.5 percent stake in the combined companies.

But even while the government was dealing with the political impact of its decision to block the deal with the limits, an administrative court in Rome last week ruled in favor of the government's move _ emblematic of the bureaucratic muddle surrounding the deal.

Adding to the deal's obstacles: The government now wants to re-evaluate the toll system, a process that would run well into next year. Any change to the tolls could drastically alter Autostrade's cash flow and value.

Analysts said shareholders were likely to abandon the plan _ at least for now, leaving open the possibility the two companies could revisit a deal in the future.

"We feel that both Autostrade and Abertis would accept a delay and would be willing to negotiate the investment plan with the government," Alberto Checcinato, an analyst with Chevreux brokerage, told Dow Jones Newswires.

Autostrade shareholders, who already approved the deal in June, were to vote Wednesday on a plan to pay Autostrade shareholders an extraordinary dividend of ??3.75 (US$4.60) for every share. The dividend is intended to align the companies' value and make a one-to-one swap ratio possible. Abertis shareholders also approved the deal in June.

Trading in Autostrade shares was suspended pending the vote.

Under terms of the Abertis-led merger, Abertis shareholders would wind up with 50.3 percent of the shares to Autostrade's 49.7. The Benetton family, which has a 52 percent stake in Autostrade, would remain the largest shareholder, with a 24.9 percent stake.

The new company would be based in Barcelona, with a Spanish chief executive, but the members of the board of directors and executive committee would be evenly split between the two companies. The company would be listed in both Italy and Spain.

The deal would create a company with a market value of US$29.7 billion and more than US$7.4 billion in annual revenue, operating in 16 countries with a road network of 6,713 kilometers (4,171 miles) _ including 3,408 kilometers (2,117 miles) in Italy.