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Vodafone rejects Iliad’s €11bn offer for its Italian business

  • February 10, 2022
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Vodafone has rejected a bid for its Italian business from French billionaire Xavier Niel’s Iliad, as the European telecoms group comes under pressure from an activist pushing for a turnround.

Iliad submitted an offer of more than €11bn for Vodafone’s Italian business on Saturday, according to people familiar with the matter, representing about seven times earnings before interest, taxes, depreciation and amortisation.

UK-listed Vodafone rejected the bid on Thursday saying it did not represent “the best interests of shareholders”.

“Vodafone continues to pragmatically pursue several value accretive in-market consolidation opportunities to deliver sustainable market structures in its major European markets, including Italy,” the company said.

Iliad did not immediately respond to a request for comment.

Vodafone shares were up 0.8 per cent in afternoon trading in London at 140.7p. The FTSE 100 company has shed about 30 per cent of its market value over the past five years.

Chief executive Nick Read has previously expressed support for consolidation in some of Europe’s more fragmented telecoms markets. He is under pressure to revive Vodafone after it emerged that Europe’s biggest activist investor, Cevian Capital, had taken a stake in the company and is pushing for a structural overhaul of the business.

Niel’s attempt to consolidate the crowded Italian market is a bold one, given that Iliad only entered the country in 2018 and remains the fourth-largest mobile player with about 8 per cent market share.

Italy was its first foray outside its home country. The group has since invested heavily to build a network and sought to woo customers with simpler and often cheaper offers than those of its rivals.

Vodafone has a 28 per cent market share in mobile — on a par with leader Telecom Italia’s TIM brand, according to the Italian telecoms regulator Agcom. Italy is Vodafone’s third-biggest market in terms of revenue after Germany and the UK.

Analysts at Barclays estimate that Vodafone’s Italian business has an enterprise value of €6.9bn, or 5.2 times its expected ebitda in 2022 in comparison to the rejected offer of about seven times ebitda.

Additional reporting by Leila Abboud and Mark Wembridge

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