French infrastructure group Vinci said it had agreed to buy Spain’s ACS energy business for about 4.9 billion euros ($5.75 billion) in cash, just below the price it offered in October, Vinci then made a non-binding offer of €5.2 billion to buy ACS’s industrial unit, including its energy business.
In a statement, Vinci did not reveal why it had accepted the lower price offer or whether it would still acquire all the assets it offered to buy in October. The agreed price represents an enterprise value of 4.2 billion euros, and Vinci has committed to paying costs an additional contingency amounting to 0.6 billion euros over a period of 8.5 years.
With this deal, Vinci aims to strengthen its business in energy project contracting and develop its renewable energy projects. Together, Vinci and ACS will form a joint venture of 51% to 49% that will own advanced assets in the field of renewable energy, and the transaction will be funded by Vinci’s cash flow and lines of credit, although it has stated that this will not affect its balance sheet.
The deal is expected to generate profit for Vinci starting in the first year after its closing, which is expected to occur towards the end of 2021, and profits will range from a medium to high singles percentage (5-9%), and according to the stock market, Vinci shares are up 3% to €89.9, while shares of ACS saw no volatility after rising 26% when the deal was first announced.