Telecom Italia May Be Takeover Target Following Shareholder Shakeup
Telecom Italia is looking at a revamp of its complex shareholding structure that could see the company become a target for a takeover bid.
The company's shareholders have a six-year partnership which expires this month, but their complex agreement has been said to have restrained the value of the company's shares as any bidder for the company has to negotiate the Byzantine structure.
The company is said to be keen on seeking a large outside investor as it faces a potential downgrade of its heavy debt burden to junk status.
Telecom Italia is also said to have renewed contact with Egyptian billionaire Naguib Sawiris, after it blocked his offer of a major investment in the company last year.
Telecom Italia is effectively controlled by a holding company that owns just 22.4% of its shares. That holding company, Telco is owned by Italian financial institutions Mediobanca, Intesa Sanpaolo and Generali -- along with Spain's Telefonica.
Two Telco investors, Mediobanca and Generali have already indicated that they are looking to sell their stakes.
Another Telecom Italia investor Marco Fossati, who owns 5 percent of the company has urged the Spanish giant to either sell its stake, or permit other companies to launch a takeover bid.
"Telefonica must decide: either it sells its stake to make way for other telecom players or it merges with Telecom Italia," Fossati told Reuters. "The worst thing that can happen to Telecom Italia is keeping the status quo," he added.
Telefonica owns 42.3% of the holding company, which it bought back in 2007 for EUR2.3 billion.
The company's board of directors is expected to discuss options for reforming the shareholder structure later this month.
On the web: Reuters