Tuesday, October 24, 2017

Takeover bid on ABERTIS



Welcome brothers to a new video of my channel brothersindividends.com, as always, I invite you to subscribe and like the video if you enjoyed it, as it allows me to reach more people.

Abertis is a spanish conglomerate corporation, specialized in telecommunications and in particular, the managing of toll roads.

I invested in it because it is a relatively large multinational, with a predictable and stable source of income, and offered a good dividend yield, which even at the current very high price is a quite decent 4,35%.

It has been announced that it has come under a takeover bid from the italian company Atlantia, a company in the same sector which Abertis had wanted to buy in the past, but was blocked from doing so by the Italian Government.


Initially, Atlantia offered 16,50 euros for each Abertis share, but the price has already reached above 19 since the announcement of the takeover bid, as it usually happens in these cases.

The spanish government was cautious towards this takeover bid, since Abertis owns Hispasat, which operates a grid of satellites considered a strategic asset as it guarantees government communications.

After the bad experience with Endesa, where another italian company bought it and turned all benefits of the company into dividends, even to the point of indebting Endesa to provide further dividends, I believe there might have been unofficial contacts with national companies to act as white knight and provide a counter-offer, in this case, ACS through its german subsidiary Hochtief, which has offered 18,76 euros for each Abertis share.

Now the italians are saying they may produce a new counter offer, increasing further the price.

All shareholders are given the option to keep or sell their shares, either to the stockmarket or to the company doing the takeover bid.


If the takeover bids were to buy 100% of the shares of the company to delist abertis, that is, removing abertis from the stock exchange, I would definitely sell, as once completed the takeover I would be unable to sell my shares as there would be no liquidity, only to the majority owner could buy if it accepts, and at whatever price it offers.
In the coming days, weeks and months we will know more about the bids for Abertis.

If the takeover bids are not to delist, then I have more options:

I prefer to keep Abertis, it being the cash cow I know and love, as long as it is still listed in the Madrid stock exchange.

If prices rise like crazy through takeover bids and counter-takeover bids, then I might sell, either to the stockmarket or to the company doing the takeover bid. I will probably also sell if the share is listed outside of Spain, as I would face dual taxation and I would have to yearly ask to be reimbursed this quantity.

I definitely won't take the Atlantia offer of their shares in exchange for Abertis shares, as, again, I would face double taxation, and from what I know, trying to get it reimbursed from the italian treasury department is a nightmare.



As for what prices I would consider to sell my shares?
20 and above I consider good prices to sell, it would depend on what are my options.

Ideally I would be in Abertis for the long run, it offers an excellent dividend and it is a good company in a solid sector, but I don't have a problem selling and buying shares in some other company.


Brothers, best of luck in your investments!.

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