* Vodafone rejects Iliad, Apax's Italian offer
* Offer not in shareholders' interest, co says
* Vodafone shares close 0.8% lower
* Iliad says to pursue stand-alone strategy
(Adds Iliad reaction)
LONDON, Feb 10 (Reuters) - Britain's Vodafone on
Thursday rejected a preliminary approach for its Italian
business from France's Iliad and Apax Partners worth more than
11 billion euros, 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 Italian
market, before the firm founded by billionaire Xavier Niel
turned the tables by offering to buy Vodafone's local operations
outright.
Iliad appeared to indicate it would not raise its all cash
offer, describing it as reflecting a "very high" premium for
Vodafone.
"Iliad takes note of the rejection by Vodafone of its 11.25
billion euros ($12.92 billion) offer for Vodafone Italy," it
said in a statement, adding that it would "pursue its
stand-alone strategy".
Vodafone, the world's second largest mobile operator, said
on Thursday the offer 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.
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 an 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 closed 0.8% lower.
($1 = 0.8706 euros)
(Reporting by Kate Holton; Muhammed Husain and Yadarisa Shabong
in Bengaluru; Editing by Amy Caren Daniel, Kirsten Donovan)
Vodafone (VOD)