Atlantia stock price testing resistance as company extends deadline for its motorway businesses

Written by: Michael Harris
December 4, 2020
  • Atlantia scheduled a board meeting in December to look at potential bids for its motorway business
  • The transport company and CDP investment bank have been negotiating over Autostrade since July
  • Atlantia share price is trading about 2% higher this week as the buyers explore a potential break

Shares of Atlantia S.p.A. (MIL: ATL) are trading near the key resistance line as the company prepares to discuss potential offers for its motorway business Autostrade per l’Italia.

Fundamental analysis: Options to be discussed

Italian transport company Atlantia scheduled a board meeting in December to look at potential bids for its motorway business Autostrade. The management will also hold a meeting with shareholders to talk about the demerger of the unit.

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This move would buy some time for Italy’s investment bank CDP and co-investors to come up with an offer for Autostrade after they told Atlantia they were not ready to place bids yet a few days ago.

However, it still remains unclear if the consortium will be able to have a final offer for Autostrade by the new time limit. In November, CDP and investors demanded 10-week due diligence on Autostrade, which will expire in January.

Atlantia and CDP have been negotiating over Autostrade since July but haven’t come to an agreement yet due to certain complications. The deal is expected to settle the dispute between the Benetton family, Atlantia’s main investor and Italy’s government after the collapse of Atlantia’s bridge in 2018 which had fatal consequences. 

CDP and Atlantia are struggling to agree over the worth of the motorway unit as Atlantia demanded a better offer after CDP bid 8.5-9.5 billion euros for Autostrade. CDP and consortium are even more watchful when it comes to the Autostrade deal following the reports about alleged mismanagement by former Autostrade’s officials.

If the two companies fail to come to an agreement, Atlantia could decide to spin off and sell or list its motorway units. Atlantia is expected to meet with its shareholders by January 15 and could demand from its investors to let it demerge its motorway assets.

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Technical analysis: Breakout possible

Atlantia share price is trading about 2% higher this week as the buyers explore a potential break above the key short-term resistance located near the 16.00 handle. A break would open the door for a push towards 16.90, which represents a former 6-year low for the stock. 

Atlantia stock daily chart (TradingView)

A resistance of the wedge, that had been created since a plunge in the price action in March, comes at 15.90. A break would open the door first to 16.90 and then 18.90 a mid-term target for the buyers. 

Summary

Italian transport company Atlantia is expected to hold a board meeting in December to look at potential bids for its motorway business Autostrade, as well as meet with its shareholders by January 15 to discuss a potential demerger of the unit.