ACS’s Perez Says Hochtief CEO to Succeed Him as Chairman

Actividades de Construccion & Servicios SA Chairman Florentino Perez said Marcelino Fernandez Verdes, chief executive officer of German subsidiary Hochtief AG, will succeed him at the helm of Spain’s largest builder.

Perez, who’s also president of nine-time European soccer champion Real Madrid Football Club, plans to dedicate himself to the ACS Foundation, he told Spain’s La Sexta television station late yesterday in an interview. Perez said he doesn’t yet know who will follow him at Real Madrid.

“The only thing I want to do now is consolidate what we have done,” Perez, 67, said in the interview. “Happily I have successors, and especially one successor, so I’m at ease.”

Fernandez Verdes has run Essen-based Hochtief, Germany’s biggest construction company, since November 2012 after a seven-month stint as the unit’s chief operating officer. He has overseen a 74 percent increase in Hochtief’s share price while reversing a decade-long shift into services in favor of infrastructure projects.

The ACS veteran was initially CEO of the Madrid-based company’s Grupo Dragados unit before taking responsibility for all construction operations. Claudia Jane, an ACS spokeswoman, said by telephone there’s no time frame yet for the succession.

Hochtief gained as much as 3.1 percent to 70.44 euros, the highest intraday price since April 7, 2011, and was trading up 2.6 percent at 12:38 p.m. in Frankfurt. ACS increased 0.9 percent to 26.68 euros in Madrid.

‘Good Restructuring’

Fernandez Verdes has implemented “very good restructuring, originally at Dragados and then at Hochtief,” Juan Carlos Calvo, a Lisbon-based Banco Espirito Santo analyst with a buy recommendation on ACS and a neutral rating on Hochtief, said by phone. “The growth prospects in the group are coming from Hochtief and its subsidiaries. On the Spanish side, you can still reduce debt and sell assets, but the operating activities are not in a growth phase and don’t have potential from restructuring measures.”

Perez turned ACS into one of Europe’s largest builders by using mergers and acquisitions to expand Catalan construction company Construcciones Padros SA, where he became CEO in 1983. He’s the second-biggest shareholder in ACS through holding company Inversiones Vesan SA.

Subsidiary Control

ACS, which gained a majority stake in Hochtief in June 2011 after a nine-month battle, has tightened control since the German unit has been under Fernandez Verdes’s stewardship.

A 256 million-euro ($355 million) share buyback and stock cancellation by Hochtief last year boosted ACS’s holding to 55.7 percent from 50.4 percent. Fernandez Verdes said on Feb. 27 that he intends to ask shareholders for permission for further buybacks.

Hochtief offered A$1.16 billion ($1.05 billion) earlier today to increase its stake in Leighton Holdings Ltd., Australia’s biggest builder, to as much as 74 percent from the current 59 percent holding. It’s considering a full takeover, Hochtief said.

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