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Spanish to Take-Over Telecom Italia?
(25 Jan 2010, BWCS Staff)The three largest shareholders in Telecom Italia's holding company, Telco, have all denied a newspaper story that Spanish operator Telefonica is preparing a takeover bid. According to the Italian newspaper La Repubblica, one of the largest shareholders in Telco, Mediobanca has been busy analysing a possible merger between Telco and Criteria CaixaCorp, a holding company backed by Spanish financial institution La Caixa. This move would, the newspaper claimed, generate a "paper merger" between Telecom Italia and Telefonica. The La Caixa banking group owns 3.75% of shares in Telefonica via Criteria. The Telco consortium owns 23.6% of Telecom Italia.
Fuel was added to the flames of merger speculation last week when Miguel Sebastian, the Spanish minister for Industry, claimed that Italy should be "open to Spanish investors" when asked about the chances of any takeover going ahead. However, Mediobanca and its fellow shareholders in the Telecom Italia holding company described the press reports as "entirely without foundation". Telefonica also told the Spanish bourse that such speculation was "unfounded". In addition, the Italian government has consistently opposed any such takeover believing that Telecom Italia's fixed-line network, which it considers to be a national strategic asset, should remain in Italian ownership.
The story in La Repubblica claimed that the Spanish telco had refused to rule out a full bid, in the form of a share swap, for Telecom Italia. It also claimed that the Spanish would be willing to pay a 25% to 30% premium over Telecom Italia's current market price. Given the fall-off in recent years in Telecom Italia's stock price, traders in Italy seemed to back the newspaper story and claimed that most investors would support the idea of a merger.
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