China Railway Construction Corp. (1186) agreed to buy a 15 percent stake in Inter Milan from the Moratti family, valuing the Italian soccer club at 500 million euros ($611 million), according to two people familiar with the talks.
The transaction would include debt from the 18-time Italian champion, said the people, who declined to be identified because the negotiations are private. Hong Kong-based QSL Sports Ltd. will be part of the investment group, the people said.
China Railway will also work with the soccer team’s new partners to build a new stadium, Inter Milan said, as Chinese builders seek more contracts overseas amid slowing growth at home. Inter President Massimo Moratti has spent several months seeking new investors to bolster the club’s finances, newspapers including Corriere della Sera have reported.
China Railway said the company and its units aren’t included in the investment group and they aren’t in talks on a stake purchase, according to a statement filed to the Shanghai Stock Exchange today. An Inter official in Milan declined to identify members of the investment group.
The builder’s investment “is completely out of the blue,” said Shanghai-based Masterlink Securities Corp. (2856) analyst James Chung. “It has nothing to do with their core business and I have no idea why they’ve done this.”
The construction company, which has no investments in Chinese sports teams, has worked on rail projects overseas, including in the Middle East, he said.
China Railway Construction Corp. is the name of both a listed company and its state-controlled parent. The unit, the world’s second-biggest listed builder, dropped 3.5 percent, the most since July 23, to HK$6.70 in Hong Kong trading.
Inter Milan said in a statement on its website late yesterday that it had sold a stake to an unidentified Chinese investor group, which will become its second-largest shareholder. Financial terms weren’t disclosed.
Inter plans to build a new stadium, which it expects to be completed by 2017, in the Italian financial capital, according to its statement. The team currently shares the San Siro stadium with city rival AC Milan, which is owned by the family of former Italian Prime Minister Silvio Berlusconi.
Inter won Europe’s Champions League, Italy’s Serie A and the Italian Cup two years ago. It failed to qualify for the elite continental club competition this season and instead is playing in the second-tier Europa League, where it faces Hajduk Split of Croatia in the third qualifying round starting today. The team’s main sponsor is tiremaker Pirelli & C. SpA.
The new stadium will be 2.5 kilometers (1.5 miles) from San Siro on the site of the 2016 Milan Expo, and will seat 60,000 people, one of the people said. It has municipal planning approval, and will be open in time for the Expo, the person said. It won’t be shared with AC Milan, the person said.
Inter said in its statement that it would work with a unit of China Railway Construction on selecting potential locations for the stadium, defining the project team and on seeking approvals in the months ahead.
Chinese builders have begun to push overseas because of slower growth at home and after the government cut spending on new railways last year following a crash. China Communications Construction Co. (1800), the nation’s No. 2 builder by market value, and machinery-maker Sany Group in April signed a deal to build a stadium in Qatar for the 2022 soccer World Cup.
China is now boosting spending on railways after economic growth cooled to the slowest pace in three years. The Ministry of Railways plans to spend 470 billion yuan ($74 billion) on railroads and bridges this year, according to a bond prospectus issued on July 30. That is higher than the 461 billion in spending for last year.
The Morattis, who also own Saras SpA (SRS), the biggest refiner in the Mediterranean region, were advised on the deal by Four Partners Advisory SIM SpA and Lazard Ltd. and by law firm Cleary Gottlieb Steen & Hamilton LLP, according to the statement.
Gallipos AG and UBS AG worked as financial advisers for the Chinese side, with Studio Legale Associato Negri-Clementi acting as legal advisers, it said.
To contact the reporters on this story: Elisa Martinuzzi in Milan at email@example.com; Tariq Panja in London at firstname.lastname@example.org
To contact the editors responsible for this story: Edward Evans at email@example.com; Christopher Elser at firstname.lastname@example.org