Salini may bid for Impregilo if no deal agreed: source

MILAN: Italian builder Salini would consider bidding for its billion-euro rival Impregilo if the pair can't agree a merger to create a national champion in the construction sector, a source close to the matter said.

Salini Chief Executive Pietro Salini said in December that his family-controlled group was studying a plan to merge with Impregilo to create an entity that was technically and financially fit for international markets.

Though it has built a stake of 15 percent over the last few months, Salini's ambitions are opposed by the Gavio family, which controls Impregilo with the Benettons and has close links to powerful investment bank Mediobanca.

"Salini is absolutely open to involving the Gavios. It would be natural for everyone to consider other proposals that can pave the way for an agreement," the source told Reuters on condition of anonymity, adding that so far Salini and Gavio had not met to discuss the plans.

"A takeover is certainly one of the alternatives. An option that can be (financially) handled," the source said. "The main way is to find an agreement with the other shareholders. The alternatives will be evaluated at the right occasion." Salini and Impregilo declined to comment.

Another option for Salini is to seek shareholder support for its plan at the next annual meeting in spring, the source said. The Italian construction sector is highly fragmented and some bankers say consolidation may help builders better cope with aggressive competition abroad and a recession at home.

A Salini takeover of Italy's biggest construction group would likely trigger a sale of Impregilo's controlling stake in Brazilian motorway group Ecorodovias and of its loss-making Fisia engineering unit.

A study by a global consultancy firm hired by Salini estimated recurrent annual merger synergies of 100 million euros, from a combination of more accurate bid pricing, central cost cuts and higher bidding success in three years, two sources said.

A combined Salini-Impregilo, worth roughly 2 billion euros ($2.6 billion), would be among Europe's 15 biggest builders by capitalisation, on a ladder where Vinci and Bouygues of France and ACS of Spain occupy the top three rungs.

A Salini-Impregilo group would see construction revenues reaching 5 billion euros in 2015, according to the study, while Vinci is expected to have generated total revenues of more than 36 billion euros in 2011.

Copyright Reuters, 2012