After a period of silence on the recently announced takeover bid of Portuguese toll road operator Brisa by its largest shareholders, Abertis – also a significant stakeholder in the company – has announced its fierce opposition to the bid.
In a strongly worded statement, Abertis – together with Franklin Templeton, the State of New Jersey Pension Fund and the Cygnus Europa Event Driven Sub Fund – objects to the takeover bid on several grounds and asks the Portuguese regulator to appoint an independent expert to evaluate the bid. The investors jointly own 15.68 percent of Brisa, according to their statement.
At the top of their complaints list is the €2.66 per share being offered by Jose de Mello, Brisa’s largest shareholder, and Arcus Infrastructure Partners (Arcus) to take over Brisa. Abertis says the offer price “clearly undervalues” Brisa and points out that Brisa spent 2011 buying back shares at an average share price of €4.18.
The Abertis-led investors also object to the takeover offer’s lack of “a control premium or even a squeeze-out premium”. Vasco de Mello, Brisa’s chairman and chief executive, had said earlier that the two takeover partners already control Brisa (Jose de Mello and Arcus jointly own 49.57 percent of the firm) and as such did not need to offer a control premium.
But perhaps the most damning allegation lobbed at the takeover consortium is that “a conflict of interest within Brisa’s board of directors may be deemed to exist” . Abertis points out that eight of Brisa’s 14 board members are tied either to Jose de Mello or Arcus and “contrary to best governance practices, these directors have not refrained […] from approving the report by the board of directors on the [takeover] offer.”
In addition, Abertis accuses Jose de Mello and Arcus of cancelling an expected dividend – “contrary to Brisa’s established dividend policy” – to boost the takeover offer. The complaining shareholders argue that without the dividend cancellation, the takeover bid “would not have met the minimum price requirement based on the criteria of the previous six month weighted average price”.
This prompts the investor group to ask the Portuguese regulator to “consider the appointment of an independent expert to undertake an appraisal of the company with the objective of determining an equitable price for the offer”. The regulator, CMVM, issued a statement a few days ago saying only that it was still evaluating the takeover proposal.
If the takeover goes ahead unchanged, it will cost Jose de Mello and Arcus some €700 million, two-thirds of which will be financed with debt from Portuguese banks Banco Comercial Portugues, Banco Espirito Santo and CaixaBI.
Brisa’s share price – like many other Portuguese stocks following the crisis – has taken a beating, decreasing sharply from a high of just over €10 per share in 2007. Over the course of last year, the company saw half its share price wiped out.