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Spain's Ferrovial studies Cintra merger

Spanish construction-to-airports company Ferrovial said it was studying a possible merger with its sister company, toll-road firm Cintra, sending Cintra shares higher.

Ferrovial, which already owns 68% of Cintra, said there were no agreements in place as yet.

The owner of British airports group BAA has said in the past it intended to raise its stake in Cintra, whose toll road portfolio is concentrated in Spain, Canada and the United States, to 75%.

Under Spanish law, a parent company must own at least 75% of a subsidiary to consolidate taxes. The 32% of Cintra Ferrovial does not own has a current market value of around €1 billion ($1.4 billion).

Cintra is looking to sell its car park business and other assets with a total value of around €1 billion, which could provide cash for any minority shareholder buyout.

Britain's anti-trust regulator told Ferrovial earlier this week to sell London's Stansted and Scotland's Edinburgh airports as well as London Gatwick. These asset sales could also provide cash for any deal, analysts said.

Ferrovial managed to successfully carry out a massive Ł13.3 billion ($20.51 billion) refinancing of its British airports in August.

“The trigger could have been, apart from Cintra's current market price, the successful refinancing of BAA in the summer, allegedly allowing Ferrovial to consider the buyout project,” said broker BPI.

Cintra shares have fallen around 35% since the beginning of the year, punished by negative sentiment surrounding falling traffic figures during a global economic slowdown. (Reuters)