COMPANY NEWS Merger creates Italian tunnelling force 16 Apr 2013
Peter Kenyon, TunnelTalk
International construction and tunnelling contractor Impregilo is set to merge by year end with smaller Italian rival, Salini Costruttori SpA. This follows successful acquisition by the smaller company of more than 86% of the Impregilo shares.
The outcome ends a nine month battle between the two largest minority shareholders - the Gavio family via investment company IGLI (30%) and Salini (30%) - for control of Impregilo, Italy's largest construction company.
Pietro Salini's company has gained control of Impregilo

Pietro Salini's company has gained control of Impregilo

The move also affects USA-based construction company SA Healy, a wholly-owned subsidiary of Impregilo since 1982. It could also affect Italian TBM manufacturer and tunnel services company Seli, which has delivered the tunnel construction element on many of Salini's current and past metro and transportation projects.
A cash offer of €4 for each Impregilo share it did not already own was made by Salini, which is privately owned, as part of an official voluntary public offering on 18 March (2013). By close of business at the end of the offer date (12 April), the Italian Stock Exchange confirmed that undertakings to sell had been obtained for four fifths of the outstanding shares. The price values Impregilo at US$2.1 billion.
Salini started buying Impegilo shares in late 2011 when they were priced at €1.57. The price continued to rise throughout 2012, and in July, Salini gained control of the Impregilo board from the Gavio family, which until then had been the largest minority shareholder in the company.. The boardroom victory paved the way for last month's formal offer for all outstanding shares, but clear signals about the future creation of a single entity emerged in January (2013) when Salini and Impregilo won their first ever joint venture contract in Panama.
Impregilo-SA Healy JV workers prepare the Lake Mead TBM

Impregilo-SA Healy JV workers prepare the Lake Mead TBM

Announcing the US$560 million contract win for access roads to a new copper mine near Panama City, Salini CEO Pietro Salini said: "This contract represents the first successful result of the strategic agreement between the Salini Group and the Impregilo Group aimed at creating a national champion in the construction sector."
Salini hopes a merger will save €100 million a year by removing duplication at head office level, and on procurement costs. By joining forces Salini hopes to create a company large enough to compete for large-scale global projects.
Salini said of his company's plans for Impregilo: "I think we have in front of us an enormous market in expansion. All the emerging countries are investing a lot into infrastructure and we think that our combined identity will make us one of the largest in the world as a specialist."
"This offer has been made on the assumption that the company has to have a very, very heavy reorganisation; we have to make a merger happen between Salini and Impregilo, and this means a certain type of working progress and it is better that the investors are out so that we have the necessary freedom to do everything without worrying about the possible concerns of the investors. We want to have the maximum flexibility to achieve that without having to refer everything to a general assembly of shareholders." To achieve this Salini explained he is looking to delist Impregilo temporarily while the reorganisation takes place, before possibly relisting the new company on the London Stock Exchange.
The acquisition looks a good one for Salini. Its core markets are in Africa and Asia, where 65% of all its current projects are based. Just over half these current projects are in the dam and power infrastructure sectors, with just under a third in the rail and subway sectors.
Impregilo is excavating 25km on Abu Dhabi STEP project

Impregilo is excavating 25km on Abu Dhabi STEP project

Impregilo, by contrast, has good project pipelines in Europe, South America, the Middle East and, via its ownership of Chicago-based construction company SA Healy, the USA.
In the USA Impregilo and SA Healy are excavating the 4.8km Lake Mead raw intake tunnel in Nevada in a US$447 million joint venture, while the two companies teamed up with Barnard to win the US$233.5 million 2.7km long Central Subway tunnels contract in San Francisco in 2011. Impregilo and its American subsidiary completed the 5.6km-long US$269 million West Side Portland CSO tunnel in 2005, and more recently narrowly missed out by just US$32 million for the US$1.09 billion Alaskan Way tunnel project in Seattle, USA, construction of which starts in the summer.
In the Middle East Impregilo is well placed to prequalify for the TBM-bored 40km main tunnel of the US$2.7 billion Inner Doha Resewerage System (IDRIS) in Qatar, having already secured a US$130 million contract from the same client for a 9.5km x 4.5m TBM-bored storm water drainage tunnel. In neighbouring Abu Dhabi Impregilo is excavating 25.5km of 6.3m and 7m TBM-bored tunnels as part of the Strategic Tunnel Enhancement Programme (STEP), worth US$443 million.
Salini and Seli are partnering for Copenhagen Cityringen

Salini and Seli are partnering for Copenhagen Cityringen

Impregilo is also prequalified as part of an Italian/Korean/Omani JV for two of the four upcoming Doha Metro packages (Red Line North and Gold Line), each worth up to US$1 billion. Award of these two packages, for a total of 26.2km of twin-running tunnels under the Qatari capital city, is imminent, and as TunnelTalk went to press the company confirmed it had been selected together with partners from Oman and South Korea, as "preferred bidder" for the Red Line North tunnel contract.
Salini is currently constructing metro extensions in Rome, where it has subcontract arrangements with Seli, as well as the technically-challenging 17km-long Cityringen in Copenhagen, Denmark (in JV with Seli). It is also working on a high speed rail project in Turkey.
References
Impregilo wins first Doha metro tunnel contract - TunnelTalk, April 2013
Final tunnel awards on giant STEP project - TunnelTalk, January 2012
Portland CSO closing in on breakthrough - TunnelTalk, September 2009
Long wait over for Lake Mead TBM - TunnelTalk, September 2011
Central Subway tunnels contract awarded - TunnelTalk, June 20011
First of four Seli EPBMs ready for Copenhagen - TunnelTalk, November 2012
Goals reached in Hong Kong and Rome - TunnelTalk, March 2012
Metro breakthrough in Rome - TunnelTalk, September 2010

           

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