Tiscali Shares Soar on Vodafone EUR1.6 Billion Bid Report
MILAN -(Dow Jones)- Shares in Italian broadband operator Tiscali jumped by up to 10% Tuesday in Milan after a report in the Italian press that UK giant Vodafone Group is ready to present a formal bid for Tiscali's U.K. and Italian assets in the next 24 hours.
According to daily MF, Vodafone will offer around EUR2.80 a share, valuing Tiscali at EUR1.6 billion, including tax credits.
Tiscali said Tuesday that no decision has been taken yet on its sale process, adding that negotiations are ongoing with several operators and "the price is part of such negotiations."
But the company's statement didn't put the brakes on Tiscali's shares, which by 0926 GMT were up 8.1% at EUR2.54, strongly outperforming a flat overall market.
Vodafone meanwhile said it wouldn't comment on the report.
Since Tiscali announced it was effectively up for sale at the end of March, its share price has jumped more than 30%, bringing its market capitalization to around EUR1.5 billion.
Analysts at Euromobiliare noted that a possible bid by Vodafone at EUR2.80 per share would be "a full M&A valuation, but not unrealistic." They said this price would imply a Tiscali valuation of EUR725 per client, plus tax credits for EUR490 million.
Despite being repeatedly tipped as a takeover target, the firm has grown in the U.K. during the past few years through acquisitions. With a 12% market share, Tiscali is now the fourth-biggest broadband operator in the U.K.
Acquiring Tiscali's assets, would ensure Vodafone a strong broadband presence in the U.K. and complete its penetration strategy in Italy, after the company bought the Italian assets of Tele2 last October.
-By Giada Zampano, Dow Jones Newswires; +39-02-58219907; giada.zampano@dowjones.com
(Erica Herrero-Martinez in London contributed to this report.)
(END) Dow Jones Newswires
Posted to the site on 3rd June 2008
