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* Vodafone rejects Iliad, Apax's Italian offer
* Offer not in shareholders' interest, co says
* Vodafone shares up 0.95%
(Writes through, add details)
LONDON, Feb 10 (Reuters) - Britain's Vodafone on
Thursday rejected a preliminary approach for its Italian
business from France's Iliad and Apax Partners, the first public
skirmish in what could be a new wave of European telecoms deal
making.
Vodafone boss Nick Read, under pressure from new investor
Cevian Capital and other shareholders, has been vocal in his
wish to see European operators merge in local markets to build
stronger companies that can invest in fibre and 5G networks.
Reuters reported in January that Vodafone and Iliad
discussed combining their businesses in the cut-throat
competitive market of Italy, before the firm founded by
billionaire Xavier Niel turned the tables by offering to buy
Vodafone's local operations outright.
A source close to the matter told Reuters on Wednesday that
Illiad had offered more than 11 billion euros for Vodafone's
Italian unit. Vodafone, the world's second largest mobile
operator, said on Thursday that was not in the best interests of
shareholders.
"The board and management of Vodafone remain focused on
delivering shareholder value through a combination of its
organic growth strategy over the medium-term and ongoing
portfolio optimisation," it said, adding that it was pursuing
several "value accretive" deals.
Vodafone did not disclose the size of the bid from Iliad and
the private equity group in its statement https://bit.ly/3rFnte3
.
Analysts at Jefferies said selling to Iliad, a disruptor in
Italy that helped turn the market hyper competitive, would set
the wrong precedent.
"Difficulties in Italy are largely attributable to Iliad's
market entry in May 2018, and could be rapidly resolved if Iliad
were to adjust its commercial approach in search of
profitability," they said.
They argued a joint venture between the two would give
Vodafone exposure to market recovery. Jefferies said the 11
billion euro figure implied an enterprise value to core earnings
multiple of 7 times, a figure it described as underwhelming.
The news from Vodafone comes as all European operators look
at ways to reinvigorate their operations, with bankers reporting
talks in multiple countries.
Operators are hoping that regulators in Brussels will show
greater awareness of the need to invest in networks after the
pandemic. British regulator Ofcom said this week it was no
longer ideologically-wedded to the need for four operators.
Iliad's bid, which was first reported by the Financial
Times, comes as Italy's biggest phone group Telecom Italia
(TIM) is assessing a 10.8 billion euro takeover
approach from U.S. fund KKR.
Vodafone's London-listed shares were 0.95% higher at 1445
GMT.
($1 = 0.8771 euros)
(Reporting by Kate Holton; Muhammed Husain and Yadarisa Shabong
in Bengaluru; Editing by Amy Caren Daniel, Kirsten Donovan)
