Trimming Bouygues FVE to EUR 35 After Equans Acquisition; Price Paid for the Business Is High

Bouygues is a conglomerate with a disparate number of businesses. In its construction segment Bouygues develops big infrastructure projects such as motorways, rails, power plants, and tunnels among others. Despite having small margins, the construction business is usually more resilient to the cycle as infrastructure spending tends to be less affected by recessions than residential construction. Bouygues’ cost structure is highly variable so when difficult times come it can adjust its cost base rapidly (though this also prevents it from benefitting from operating leverage in times of high demand). Both Bouygues Construction and Inmobilier (residential construction) have high exposure to France, as a significant portion of their business comes from there.