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ACS shares soar after Vinci offers $6 billion for its industrial unit

MADRID (Reuters) - Shares of Spanish engineering and infrastructure group ACS ACS.MC surged 16% on Friday after French rival Vinci SGEF.PA made a non-binding offer to buy ACS's industrial unit Cobra for 5.2 billion euros ($6.10 billion).

FILE PHOTO: The logo of Vinci is pictured at the company's headquarters in Rueil-Malmaison near Paris, France, April 22, 2020. REUTERS/Charles Platiau

ACS’s board will proceed with negotiations, the Madrid-based company said in a filing to the stock market regulator.

Vinci has offered to pay at least 2.8 billion euros ($3.28 billion) in cash and the rest in Vinci shares, the filing said. Vinci shares were up 2% after the news.

“Our view is that this process will create value and be good for (ACS) shareholders,” analysts at Alantra Equities said in a note, acknowledging that Vinci’s offer valued Cobra 50% higher than Alantra’s own estimates, making ACS a strong “buy”.

Cobra - whose business covers engineering and public works activities, renewable energy projects and concession contracts - booked sales worth 6.3 billion euros in 2019.

The Alantra analysts said its divestment would leave ACS with a less diversified business.

Angel Perez Llamazares, an analyst at Spain’s Renta4Banco, said Cobra would be a good long-term asset for ACS to keep given its high revenues and strong portfolio of green energy contracts, although a sale would also have advantages.

ACS reported a sharp fall in first-half profit in August and has booked losses at its Australian subsidiary CIMIC.

“In theory we consider the cash inflow (from a Cobra sale) positive, helping to mitigate the impact of the pandemic on [ACS] group’s balance sheet and the problems registered in certain subsidiaries,” Llamazares said.

($1 = 0.8538 euros)

Additional reporting by Jesus Aguado; writing by Clara-Laeila Laudette; Editing by Ingrid Melander and Susan Fenton

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