Spanish building firm Sacyr Vallehermoso unveiled plans to launch a takeover bid for French construction group Eiffage on Thursday, upping the stakes in an increasingly bitter Franco-Spanish stand-off.
The all-share takeover offer values Eiffage -- third-biggest French and seventh-biggest European public works and transport concessions group -- at 9.75 billion euros ($13.3 billion).
Sacyr's announcement comes after shareholders at Eiffage's annual meeting on Wednesday blocked Sacyr's bid to gain board seats for the second time in 2 years, despite Sacyr owning just under a third of the French group.
Eiffage, famous for building the world's tallest suspension bridge in southern France, has repeatedly spurned Sacyr's overtures. The French company has over 60,000 staff and 90% are shareholders.
Eiffage had no immediate comment to make after Sacyr stepped up its offensive. The firms have traded insults and threatened each other with legal action in a feud raising the spectre of economic nationalism.
Sacyr, looking to diversify from a overheated Spanish construction market, said it had asked the French market regulator for permission to bid for the two-thirds of Eiffage it does not already own.
Sacyr said the deal would create a European heavyweight in the construction and road building businesses, with a combined portfolio of motorway concessions exceeding 3,000 kilometres anda workforce of over 72,000.
"We are not competitors, but we are complementary," Sacyr Chairman Luis Fernando de Rivero said at a press conference in Paris, rebuffing earlier claims from Eiffage the companies were rivals and could not work together.
Sacyr plans to exchange 12 of its shares for 5 Eiffage shares, it said, and would issue up to 149 million new shares to pay for the deal.
At Sacyr's closing price on Wednesday, the deal values each Eiffage share at 104.7 euros, a 6% discount from Eiffage's closing price on Wednesday. Eiffage's shares have risen in recent weeks on speculation Sacyr would launch a bid.
Orange Growers
Sacyr said the bid would be a success if it got at least 60% of voting rights in the French group. Analysts said on Thursday it was unlikely they could get backing from 60% of shareholders, although the price offered a good deal for Eiffage investors.
Sacyr and two other Spanish firms have almost 40% of Eiffage, and other Spanish groups have also bought stakes in the French company recently. Eiffage staff, management and French state-owned bank Caisse des Depots have some 37.5%.
The free float is around 8%, said one analyst.
"It's very unlikely that they will reach 60%," said Nabil Ahmed, analyst at Deutsche Bank, which gives Eiffage a fair value of 78 euros.
Trade of Eiffage shares was delayed until further notice, Bourse operator Euronext said. Trading in Sacyr was also suspended.
Sacyr was due to hold a news conference in Paris followed by an analysts meeting.
Sacyr and Eiffage said on Wednesday they would take legal action against each other and Sacyr Chairman Rivero stormed out of the meeting after 89 Spanish investors holding 17.5% of Eiffage were stripped of their voting rights following allegations they were acting in concert with Sacyr.
Eiffage Chairman Jean-Francois Roverato said he wanted to "save Eiffage".
"I want to prevent that orange growers and golf players from Murcia can take control of Eiffage at the expense of its shareholders," he said.
Eiffage is renowned for building the world's tallest suspension bridge at the Millau viaduct, which spans the valley of the river Tarn.
Taller than the Eiffel Tower, longer then the Champs Elysees, the bridge was conceived by British architect Norman Foster.