Iliad Proposes Italian Unit Merger with Vodafone
On Monday, Iliad revealed an ambitious proposition to merge its Italian unit with Vodafone, aiming to harness the combined strengths of Iliad’s expanding consumer base and established presence in Italy’s competitive market.
Following the announcement of the joint-venture proposal, which had previously signaled a review of options in Italy, experienced a notable 6.6% increase in its shares. This positive market response came as a validation of the potential synergy between the two telecom giants, as initially reported by Reuters.
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This strategic move by Iliad aligns with Vodafone’s ongoing exploration of potential deals, including discussions with Swisscom’s Fastweb Italian unit. Telecom operators in Italy are actively seeking ways to consolidate in a market characterized by shrinking revenue and margins, aiming to enhance returns on capital for investors.
Vodafone officially acknowledged Iliad’s offer, expressing support for in-market consolidation in Italy. The proposed merger envisions the creation of a company with a substantial enterprise value of 14.9 billion euros ($16.3 billion), enjoying backing from Iliad’s board and its key shareholder, Xavier Niel.
Detailed Proposal: Key Financial Terms
According to the proposed plan, Vodafone stands to gain 6.5 billion euros in cash, a 50% stake, and a 2.0 billion euro shareholder loan for long-term alignment. In return, Iliad would receive 500 million euros and a corresponding shareholder loan, along with the option to acquire an additional 10% of shares annually at the deal’s closing price.
This move follows Iliad’s offer of 11.25 billion euros to acquire Vodafone Italy outright last year, which was rebuffed. The two companies had been in talks before the public proposal, with governance and the appointment of the chief executive emerging as sticking points in negotiations.
While Vodafone explores potential deals with Fastweb, analysts note that a merger with Iliad might face higher regulatory hurdles but could offer greater synergies, exceeding 600 million euros per year. Citi views a deal with Iliad as the optimal outcome, considering the potential benefits it could bring to both companies.
Buoyed by optimism surrounding a potential Iliad-Vodafone alliance that could reduce market competition, shares in Telecom Italia rose by 3.7%. The telecom landscape in Italy is currently led by TIM in mobile, with Vodafone closely trailing, and a potential merger could reshape the dynamics of the industry. In the fixed-line broadband arena, TIM maintains a significant lead.
By incorporating H2 subtitles, the structure becomes clearer, allowing readers to navigate through the key points and details of the Iliad-Vodafone merger proposal and its implications for the Italian telecom market.
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