Citi to Buy Spanish Highway Operator

MADRID, Spain -- Spanish construction company Sacyr Vallehermoso said Monday it has agreed to sell its highway-operating unit, Itinere, to Citigroup (C Quote) in a deal valued at nearly 7.9 billion euros ($10 billion).

The sale involves 2.87 billion euros in cash and 5 billion euros in assumed debt, the company said.

Sacyr Vallehermoso has been hard hit by the collapse of Spain's real estate bubble and is eager to ease its debt load.

The sale of Itinere to Citi Infrastructure Partners, which needs regulatory approval, will reduce the Spanish builder's debt to about 12.5 billion euros, the latter said in a filing with Spanish stock market regulators.

If this deal goes through, Sacyr Vallehermoso will have cut its debt by 37% since Jan. 1, it said.

Much of its debt stems from its acquisition two years ago of a 20% stake in Spanish oil company Repsol-YPF.

In September, Sacyr Vallehermoso put that stake up for sale and the Russian oil company Lukoil recently expressed interest in acquiring it.

The money Sacyr Vallehermoso would take in from the Citigroup deal is expected to reduce pressure to sell its stake in Repsol-YPF.

Citigroup will offer to buy all of Itinere's stock at 3.96 euros ($5.04) a share, the Spanish firm said.

The Spanish construction company will first sell Citigroup a 42.8% stake in Itinere, and once this is complete, another 11.6% stake, Sacyr Vallehermoso said.