(Adds details, context)
By Mathieu Rosemain
PARIS, Feb 9 (Reuters) - French telecoms group Iliad has
offered more than 11 billion euros ($12.6 billion) to buy
Vodafone's Italian business, a source close to the
matter said on Wednesday, as the firm founded by billionaire
Xavier Niel seeks to grow overseas.
The price tag represents about seven times Vodafone Italia's
core operating profit, the source said, adding that Iliad is
teaming up with a private equity firm for the bid.
The valuation is in the range of what some brokers, such as
Banca Akros, said they expected Iliad to offer.
Paris-based Iliad has been reviewing options to further
expand in Italy in recent months as it seeks to take advantage
of deal fever in Italy's telecoms industry to accelerate
consolidation and cease a price war that has been slashing its
margins, sources have said.
Iliad's bid, first reported by the Financial Times, comes as
incumbent Telecom Italia (TIM) is still assessing a
10.8 billion euros takeover approach from U.S. fund KKR
aimed at taking Italy's biggest phone group private.
KKR’s bid values TIM's business at more than five times its
core operating profits.
If successful, an Iliad-Vodafone Italia tie-up would create
a telecoms powerhouse with a mobile market penetration of about
36%, above TIM.
Such a deal would transform the Italian telecoms landscape
by cutting the number of major mobile operators from four to
three. It would also face scrutiny from antitrust from
regulators.
Iliad has secured financing from a top European bank, the
source said. Vodafone's board, which has received the offer, has
not yet replied, the source added.
Reuters last month reported that Iliad and Vodafone were in
talks to combine their respective businesses in Italy in an
attempt to end cut-throat competition.
Vodafone and Iliad declined to comment.
($1 = 0.8749 euros)
(Reporting by Mathieu Rosemain;
Additional reporting Aby Jose Koilparambil and Elvira Pollina;
Editing by David Evans and Elaine Hardcastle)
Vodafone (VOD)