January 9, 2013 / 7:20 PM / in 5 years

UPDATE 1-Italian groups Atlantia and Gemina start merger talks

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MILAN, Jan 9 (Reuters) - Italian motorway group Atlantia SpA and Gemina, which controls Rome airport operator ADR, have started talks over a possible merger, they said on Wednesday.

The two companies, which are both controlled by the Benetton family's holding company Sintonia, said in brief separate statements that negotiations had begun on Wednesday.

Combining the two companies would help ADR with a 2.5 billion-euro ($3.3 billion) investment plan for the airport at Fiumicino by giving it better access to capital markets, sources with direct knowledge of the matter had said on Tuesday.

It would also further streamline the Benettons' control of some of their infrastructure activities.

One idea is for Atlantia to launch a cash takeover offer for Gemina, although a share deal could not be ruled out at this stage, one of the sources said on Wednesday.

"Cash would be more market-friendly since it would give Gemina shareholders a way out if they did not want to stay in the combined entity," the source said.

The aim would be for Atlantia to buy the 64 percent of Gemina that Sintonia does not already own, which at current market prices is worth about 1 billion euros ($1.3 billion). Atlantia has a market value of 9.1 billion euros.

"January will be a month for studying the options, while February will see the start of the execution process," one of the sources said on Wednesday.

Atlantia's shares closed 0.4 percent higher on Wednesday at 13.8 euros, while Gemina - whose stock has risen sharply over the past month on the back of takeover speculation - was down 1 percent at 1.18 euros. ($1=0.7667 euros) (Reporting By Stephen Jewkes; Editing by Greg Mahlich)

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