Street Calls of the Week
Investing.com -- Spanish construction giant ACS is reportedly planning a major reorganization that could affect all divisions, according to Spanish newspaper Vozpopuli.
Stock was trading 1.5% lower in Tuesday’s trading session in Madrid.
The company has contacted an international consulting firm to design a reorganization plan with the key objective of reducing headquarters costs by as much as 30%, market sources told the newspaper.
ACS management reportedly believes the company should adopt a lighter structure amid increasing international uncertainty.
Historically, ACS headquarters costs averaged approximately €60 million annually between 2012 and 2023, representing about 3% of the company’s EBITDA. Meanwhile, its subsidiary Hochtief saw headquarters costs averaging more than €70 million per year from 2014 to 2023, accounting for 6% of EBITDA.
The complexity of ACS group’s double-tier structure has led analysts to apply holding company discounts in sum-of-the-parts valuations for both ACS and Hochtief, currently standing at 10% and 5%, respectively. These discount assumptions have been gradually reduced in recognition of progress made by the company in recent years.
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