Portuguese conglomerate Jose de Mello and fund manager Arcus Infrastructure Partners, the largest shareholders of Portuguese toll road operator Brisa, have just sweetened their takeover bid for Brisa with yesterday’s announcement to the Portuguese competition authority.
In a statement, the partners said they are now willing to pay €2.76 per Brisa share, a €0.10 increase to their previous €2.66 per share offer. That means that Jose de Mello and Arcus will have to splash some €726 million up from the previously planned €700 million to take over Brisa. Portuguese banks Banco Comercial Portugues, Banco Espirito Santo and CaixaBI had previously agreed to fund up to two-thirds of the takeover bid.
The revised offer comes hot on the heels of a recently released strongly worded statement by Abertis, Franklin Templeton, the State of New Jersey Pension Fund and the Cygnus Europa Event Driven Sub Fund objecting to the takeover bid on several grounds and asking the Portuguese regulator to appoint an independent expert to evaluate the bid.
The investors jointly own 15.68 percent of Brisa and their chief complaint regarding the takeover bid was its low price, which they said “clearly undervalues” Brisa. The investor consortium pointed out that Brisa itself spent 2011 buying back shares at an average share price of €4.18 per share.
But there were other objections, including the Jose de Mello/ Arcus Infrastructure proposal’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.
The Abertis-led minority investors also believe that “a conflict of interest within Brisa’s board of directors may be deemed to exist,” pointing out that eight of Brisa’s 14 board members are tied to Jose de Mello or Arcus and, “contrary to best government practices, these directors have not refrained […] from approving the report by the board of directors on the [takeover] offer.”
Abertis could not be reached for comment on the revised takeover offer in time for this story.
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.