MILAN -(Dow Jones)- Italian utility Enel SpA (EN) said Friday it had abandoned talks to acquire defunct telecommunications operator IPSE.
Enel a week ago offered to purchase IPSE, one of five holders of Italy's third-generation mobile-phone licenses, for EUR792 million. Enel said it would make EUR200 million on the deal, thanks to its acquisition of credits that would slice EUR1 billion off its tax bill.
"During the final phase of negotiations, divergences emerged regarding some fundamental elements of the acquisition and it was impossible, partly because of the limited time available, to satisfy reciprocal positions regarding guarantees requested for the positive conclusion of the transaction," the company said Friday.
Enel has therefore decided to withdraw from the acquisition of IPSE, it said.
Enel did not specify what conditions failed to be satisfied during the negotiations.
To tap IPSE's tax breaks in fiscal 2004, Enel would have had to acquire the company before the close of business Friday.
IPSE's owners include Telefonica Moviles SA (TEM), Capitalia SpA (CAP.MI), TeliaSonera AB (TLSN.SK), Fiat SpA (FIA), Edison SpA (EDN.MI) and Rome utility ACEA SpA (ACE.MI).
They would have used the proceeds from the sale of IPSE to pay an outstanding EUR826 million fee to the Italian government for the UMTS frequencies it bought four years ago.
Italian tax authorities told Enel Thursday they had no objections to the power company's proposed purchase of IPSE partly to obtain a tax break, Italian news agency Radiocor said, citing people familiar with the situation.
The tax authorities said, however, that Enel may no longer be eligible for the tax break if it later sold its telecoms unit Wind SpA (WIF.YY), Italian paper La Repubblica said Friday, which, the paper said could be the reason why Enel decided not to go ahead with the purchase.
Enel plans to sell off or list Wind, for which it hopes to receive up to EUR13 billion.
Several offers have been made for Wind, although Scaroni has indicated that they aren't satisfactory. Scaroni has also said he will list Wind by early 2006.
Separately, a consortium of international investors said Thursday they planned to re-tender their previous offer for Wind by Jan. 20. The consortium "has asked Enel for clarification about its expectations" for Wind.
-By Jennifer Clark, Dow Jones Newswires; +39-335 833-5761; jennifer.clark@dowjones.com
(END) Dow Jones Newswires "
Posted to the site on 31st December 2004
Posted to: www.cellular-news.com/story/11576.php