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Eiffage Rises Most in More Than Three Years on APRR Buyout

Eiffage SA rose the most in more than three years in Paris trading after a unit it jointly controls said it’s buying out minority shareholders of a French toll-road operator, shoring up the unit’s finances.

Eiffage shares rose as much as 14 percent to 41.25 euros in the biggest intraday gain since March 2007, and were up 12 percent at 40.41 euros as of 12:51 p.m. in Paris. The highway operator, Societe des Autoroutes Paris-Rhin-Rhone SA, or APRR, rose 7.7 percent to 54.78 euros.

Eiffage and Sydney-based Macquarie Atlas Roads Group said in separate statements that Eiffarie, the joint venture they own with Macquarie European Infrastructure Fund LP, will buy 13.7 percent of APRR for 854 million euros ($1.06 billion), or 55 euros a share, adding to its 81.5 percent holding.

This is “a highly accretive transaction” for Eiffage, said Natixis analysts Gregoire Thibault and Rafic El Haddad, who lifted their earnings-per-share estimates for 2010 to 2012 by 16 percent per year on average and raised their rating on Eiffage to “neutral” from “reduce.”

APRR probably won’t pay taxes in 2011 and 2012 as Eiffarie will benefit from a French provision called “fiscal integration” once it controls more than 95 percent of the highway company, the analysts said.

Eiffarie plans to acquire the shares from funds managed by Elliott Management Corp. and Sandell Asset Management Corp. by June 24. Pending regulatory approval, it will then offer to buy the rest of publicly traded APRR for 54.16 euros a share following the payment of an 84-cent dividend on June 30.

Improved Ratios

“The deal will allow Eiffarie to refinance its debt in 2013 in a better situation and will improve the ratios of Eiffarie-APRR, which should support APRR’s credit rating,” said Philippe Delmotte, head of investor relations at Paris-based Eiffage, in a telephone interview today.

APRR’s debt is rated BBB- at Standard & Poor’s, the credit-reporting company’s lowest investment grade. S&P has had a negative outlook on the rating since June 2009, as the economic crisis hurt traffic revenue last year.

Eiffage, France’s third-largest construction company, will use its cash and available credit lines to finance the capital increase of Eiffarie needed for the buyout of APRR, Delmotte said.

Eiffarie was set up about five years ago. Eiffage has a stake of 50 percent plus one share.

Macquarie Atlas shares rose 17 percent to 92 Australian cents today, their biggest advance since Jan. 28.

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