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UPDATE 2-Sacyr, Impregilo shares up on Panama Canal win

Published 07/16/2009, 08:34 AM
Updated 07/16/2009, 08:40 AM
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* Sacyr shares rise 2 percent, Impregilo up 0.9 percent

* Order to boost Impregilo EBITDA by 15-20 mln eur-analyst

* Impact on Sacyr could be 2 percent of EBITDA-analyst

* High-profile order seen good for firms' reputations

(Adds Impregilo note, analyst comments, company reactions)

By Danilo Masoni

MILAN, July 16 (Reuters) - Shares in Spain's Sacyr Vallehermoso and Italy's Impregilo gained on Thursday after they secured a high-profile contract to expand the Panama Canal that could help them win more orders abroad.

The Panama Canal Authority announced a consortium dominated by the two companies had won the $3 billion contract after European markets closed on Wednesday.

The contract -- the biggest of its kind in Latin America -- will be signed in the next four weeks, Impregilo said in a statement. Rival bidders have eight days to review and challenge the decision, the authority said.

The Spanish-Italian group beat a team led by privately-owned U.S. firm Bechtel and a group including Spanish giants ACS, FCC and Acciona.

The three Spanish builders declined to comment on whether they would appeal. A spokesman for Bechtel was not immediately available for comment.

Shares in Sacyr were up 2 percent to 10.66 euros at 1141 GMT while Impregilo stock rose 0.9 percent to 2.46 euros. The DJ Stoxx index of construction and building materials edged up 0.6 percent.

"The award came after a very long due diligence and this adds to their prestige and reputation. It could make it easier (for them) to win contracts abroad," said a Milan-based analyst who asked not to be named.

EARNINGS BOOST

The contract is expected to boost Impregilo's core earnings by 15-20 million euros a year, Intermonte analyst Giuseppe Puglisi said in a note on Thursday. The analyst had already raised his target for Impregilo to 2.65 euros from 2.5 euros to reflect the impact of the contract.

In 2008, Impregilo's core earnings - before interest, tax, depreciation and amortisation (EBITDA) - were 251 million euros.

The impact on Sacyr would be 13 million euros or some 2 percent of consolidated EBITDA, assuming a 6 percent margin on sales, UBS analyst Ignacio Carvajal Cebrian said on July 9. Last week, the Panama Canal Authority said the Sacyr-Impregilo group had submitted the best bid for the contract, making it likely the group would be awarded the deal.

Sacyr leads the consortium with a 49 percent stake and Impregilo has 48 percent. A 1 percent stake is held by Panama builder Cusa and 2 percent by Belgian dredging firm Jan de Nul.

The contract is to build new locks and water-saving basins. Work should begin within 42 days and end in 2014.

(Additional reporting by Clara Vilar, Rodrigo de Miguel, Judy MacInnes in Madrid; Editing by Jon Loades-Carter, Lin Noueihed, John Stonestreet)

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