The Benettons, Blackstone and the Bid for Atlantia

by Edoardo Toma, Ghali Taoussi, and Orestas Freigofas

Introduction

The Benetton family and Blackstone offered to buy out Atlantia in a deal valuing the Italian highway operator at €19bn ($20.7bn). The acquisition of Atlantia, an Italian infrastructure company, represents one of the largest M&A transactions completed in 2022.

Blackstone

The Blackstone Group is one of the largest financial firms in the world, with arms operating in Private Equity (PE), real estate, hedge funds, and credit. It was founded in 1985 as an M&A firm by Peter G. Peterson and Stephen A. Schwarzman, who had previously worked together at Lehman Brothers. The company name is a cryptogram derived from the names of the two founders: Schwarz in German means ‘black’, Peter in Greek means ‘stone’.

Regarding its business structure, the Private Equity sector is made up of its flagship corporate PE funds, Blackstone Capital Partners, sector-focused corporate PE funds, including energy-focused funds, Blackstone Energy Partners funds, and Blackstone Core Equity Partners. On the other hand, the activities in the real estate sector include the management of core real estate funds and non-exchange traded real estate investment trusts. Focusing on hedge funds, we find Blackstone Alternative Asset Management, which manages hedge funds and includes Indian-focused and Asian-focused closed-end mutual funds. Finally, in the Credit Sector there is GSO Capital Partners LP, which manages credit-oriented funds.

Blackstone is also the world’s largest alternative investment firm with more than $975bn in AUM. Being one of the main players in the LBO space, it holds significant stakes in multinational companies like Hilton Worldwide, Thomson Reuters, Equity Office Properties, Versace, and SeaWorld Parks & Entertainment.

About Edizione (The Benetton Family)

Founded in 1981, Edizione S.p.A. is a financial holding controlled by the Benetton family, which manages the family’s vast business holdings. The core sectors of its business are: transportation infrastructure (Atlantia), clothing (Benetton), restaurants (Autogrill), digital infrastructure (Cellnex). Edizione is also active in the real estate sector (through the subsidiary Edizione Property), in the agricultural and hotel sectors. It holds a portfolio of shares in the financial sector, represented by investments in Assicurazioni Generali and Mediobanca.

In 2021, Edizione achieved consolidated revenues of €9.8bn, of which 77% came from outside of Italy. As of the 31st of December 2021, the Net Asset Value (NAV) of the investment portfolio equalled €12bn.

Atlantia

Atlantia is an Italian strategic investment holding company with a global presence, managing motorways and airports under concession, operating in the infrastructure sector and offering mobility services. The company was founded in 1950 after the second world war as it contributed to the restoration of Italy. Atlantia has been listed in the Borsa Italiana since 2003.

Atlantia spans a wide array of operating segments in these respective groups.

Motorways (Abertis):

Atlantia owns a controlling interest in Abertis at 51% since 2018, with the other half owned by the ACS group and the Hochtief group. The group holds concessions assigning responsibility for the development, maintenance and operation of toll and overseas toll motorways, operating approximately 9,300km of motorway in Europe. Primarily in Italy, France, Spain, Poland, USA and India.

Airports (Aeroporti di Roma and Aéroports de la Côte d’Azur):

Atlantia’s Italian Airport segment comprises the Aeroporti di Roma (ADR) and two other airports also operating within the Roman airport system as subsidiaries. In 2019, ADR was the first airport operator in Italy by passenger flow and the seventh largest in Europe.

The company’s overseas airports segment comprises Aéroports de la Côte d’Azur (ACA) and the management of three other airports in France through its subsidiaries. Altogether, in 2019, it was the country’s second main airport hub after the airport system in Paris.

Telepass Group:

The Telepass group provides integrated mobility services and is responsible for operating e-tolling systems all over Italy and thirteen other countries in Europe. The group also provides transport-concerned payment systems, breakdown services and insurance.

The company has been facing a critical period over the past few years after the collapse of the Polcevera viaduct in Genoa, Italy – also known as Ponte Morandi – on August 14, 2018, resulting in 43 deaths. Atlantia’s shares tumbled over 25% after the collapse of the bridge given that it was managed by a subsidiary of the company. The Benetton family was pressured by the Italian Government and controversy over the concessions given to the subsidiary Autostrade per l’Italia (Aspi) broke out. This had put Atlantia at risk, which ultimately led to the present sale of the company’s toll road branch to a consortium led by state-controlled Cassa Depositi e Prestiti that includes Blackstone.

In 2021, Atlantia earned €6.4bn in Revenues, an increase of 22% compared to 2020, with an EBITDA of €4bn, up 31% compared to 2020.

The Deal Structure

The Benetton family and Blackstone bought Atlantia for €58bn to take the company private and prevent rival interest in its airport and motorway operations. The bid values Atlantia’s equity at around €19bn and its enterprise value at €54.3bn, though the debt is expected to decrease once the Aspi sale is finalised. The deal having closed makes it the largest completed M&A transaction globally in 2022.

The offer for Atlantia values the company’s equity at €19 billion and its shares at a 24% premium to the company’s shares closing price before rumours of the deal began circulating. It also represents a 36% premium to the previous six months’ price average. The buyout initiates a new phase for Atlantia. Edizione, the holding company that manages the Benetton family’s wealth and currently owns a 33.1% stake in Atlantia, will control 65% of the vehicle responsible for the bid to buy the company. According to S&P Capital estimates, the transaction is at a steep 12 times 2022 EBITDA. However as reported by Morgan Stanley, Atlantia’s airports and motorways are widely regulated and inflation-linked and as a result, 2025 EBITDA is expected to rise 30% compared with 2022. For Atlantia, the sale of its motorway unit is expected to decrease the company’s debt of €36.8bn as at 2021 by €8bn. After accounting for debt, the deal values Atlantia at €19bn.

The Latest News

On the 25th of November 2022, the takeover bid on Atlantia through Schema Alfa (a vehicle controlled for the 65% by Edizione and for the remainder by Blackstone) reached approximately 96% of subscriptions (including the treasury shares held by the infrastructure holding company). According to data released by Borsa Italiana, 64,240,417 shares were contributed during the reopening of the terms, thus reaching 92.8% of the total shares covered by the offer.

On the 8th of December 2022, Borsa Italiana ordered the suspension of Atlantia shares from the listing on Euronext Milan to then proceed with the revocation of the listing starting from the session of Friday 9 December 2022.

Market Outlook

After passing the 90% support threshold on November 25^th, the buyout of Atlantia will cut another €19bn from the value of the Borsa Italiana in Milan and it will make it the 12^th company to leave the stock exchange in 2022 when it gets delisted, further reiterating fears about the state of the market.

Yet, the reason for the small number of listed companies in Italy is reflected in the nation’s history. As Andrea Beltratti, professor of Political Economy at Bocconi University recently explained, it is due to Italy’s historical lack of a strong tradition of equity finance paired with a weak economy over the last 20 years. This has led to banks and other financial agents, such as PE, taking on a more prominent role in providing funding to companies, rather than relying on markets.