Hutchison Whampoa has proposed to pay for a stake in Telecom Italia (TI) with a combination of shares in its mobile unit 3 Italia and cash, an Italian newspaper has reported. This way, Hutchison could acquire 29.9% of the Italian incumbent.
Il…
Hutchison Whampoa has proposed to pay for a stake in Telecom Italia (TI) with a combination of shares in its mobile unit 3 Italia and cash, an Italian newspaper has reported. This way, Hutchison could acquire 29.9% of the Italian incumbent.
Il Messaggero cited a memorandum of understanding sent by Hutchison chairman Li Ka-shing to TI chairman Franco Bernabe as saying the Hong Kong-based company is prepared to offer shares in 3 (aka H3G) to Telecom Italia at a price yet to be determined.
Milan-based TI issued a statement in response to the press rumours this morning reiterating that it is in “only preliminary and non-binding” discussions with Hutchison in order to assess “the feasibility of an integration process”.
Similarly, a Hutchison spokesperson today declined to comment on the Il Messagero report, saying the company has nothing to add to its earlier statement confirming “preliminary exploratory contacts” with TI.
According to the report, the cash component of the deal would value TI shares at €1.2 each – equal to the value its largest shareholder Telco has attached to the shares, but about twice as high as their current market value.
Such a deal would see Hutchison supersede Telco – comprised of Spain’s Telefonica and several Italian financial institutions – as TI’s largest shareholder. Telco currently has a 22.4% stake.
Hutchison could purchase the shares from Telco, fellow TI shareholder Findim or via the market, the report states.
Yesterday, Italian media reports suggested a tie-up between Telecom Italia and Hutchison Whampoa’s 3 Italia could see the former acquire the latter and then issue new shares to allow the Hong Kong-based company to become one of its shareholders. The reports suggested Hutchison would acquire a stake of between 10% and 20% in TI.
According to today’s Il Messaggero report, Bernabe has personally briefed Telco members on the MoU and possibilities for a tie-up with Hutchison. The TI board is set to meet this Thursday (11 April) to discuss the matter.
Both TI and Hutchison have confirmed they are in early-stage talks about a tie-up but declined to provide details.
