Investing.com -- Shares of Ferrovial gained 1% today following the company’s announcement of a strategic acquisition agreement with AtkinsRealis to purchase up to 5.06% of the 407 ETR.

The deal values the 407 ETR at an implied 100% equity valuation of CAD $41.3 billion, a substantial increase from its last transaction value of CAD $30 billion in 2019.

The acquisition is seen as a positive development for Ferrovial for two main reasons. Firstly, it establishes a higher valuation benchmark for the asset, surpassing both the market’s expectations and recent valuations reported in the media.

Secondly, it demonstrates Ferrovial’s confidence in the 407 ETR’s potential for near-term S22 penalties resolution and its long-term cash generation capabilities.

This transaction is significant as it not only reflects a valuation above recent consensus but also aligns with Ferrovial’s strategic focus on investing in high Internal Rate of Return (IRR) long-duration toll road concessions in North America.

An analyst from Jefferies commented on the agreement, stating, "Allocating to high IRR long duration Toll Road concessions in North America is directly within Ferrovial’s strategic priorities, and we view this as a positive event supporting our Buy thesis."

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