Iliad propone nuevamente a Vodafone la unión de sus operaciones en Italia.

Iliad, a company controlled by the French magnate Xavier Niel, has presented a proposal to the Vodafone group for the merger of both companies’ businesses in Italy through the creation of a new entity in which each company would have a 50% control. At the beginning of the session, Vodafone shares responded to Iliad’s offer with an increase of more than 6%, although by the end of the session, the rise was reduced to 3.77%.

The merger offer, which has the unanimous support of Iliad’s board of directors and its main shareholder, Xavier Niel, values Vodafone Italy at 10.45 billion euros, while Iliad Italy would be valued at 4.45 billion.

Vodafone would obtain 50% of the share capital of the new merged company, along with a cash payment of 6.5 billion euros and a participating loan of 2 billion euros from the shareholders of the merged company, while Iliad Italy would control the other 50%, along with a cash payment of 500 million euros and a shareholder loan of 2 billion.

As part of the proposed transaction, Iliad would have a call option on Vodafone’s stake in the new company and could acquire a 10% block of the share capital of the company each year at a per-share price equal to the closing price of the capital. If Iliad decided to exercise all call options, Vodafone would receive an additional 1.95 billion euros in cash.

The merged business is expected to generate revenues of around 5.8 billion euros and a gross profit (EBITDA) of approximately 1.6 billion euros for the fiscal year ending in March 2024, according to a statement by Iliad.

The British operator announced last month that it was considering options for its operation in Italy, including a potential merger with Swisscom, which is already present in the country through Fastweb. Last year, Iliad offered 11.25 billion euros to buy Vodafone Italy, but the proposal was rejected by the board of the British company. The new joint venture proposal, reported by Reuters, implies a multiple of earnings of 7.8 times, higher than the multiple of 7.1 times offered last year.

Vodafone’s CEO, Margarita Della Valle, is following her roadmap to divest from non-strategic subsidiaries. Before Italy, at the end of October, she signed an agreement with Zegona for the sale of Vodafone Spain for 5 billion euros.

Vodafone stated in a press release that it “has taken note” of Iliad’s announcement regarding the merger proposal in Italy. “Vodafone supports consolidation in markets where it does not achieve adequate return on invested capital and confirms that it is exploring options with various parties to achieve this in Italy, including through a merger or a sale,” the statement said.

“The proposal offers value and cash to Vodafone. The transaction also responds to Vodafone’s publicly stated intention to transform and simplify the group. The market context in Italy demands the creation of the most innovative telecommunications competitor,” said Thomas Reynaud, CEO of Iliad.

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