(Bloomberg) — Iliad SA, the French carrier backed by telecommunications tycoon Xavier Niel, has offered more than 11 billion euros ($12.6 billion) for Vodafone Group Plc’s Italian unit, people with knowledge of the matter said.
Vodafone is evaluating the proposal, the people said, asking not to be identified because the information is private. The British company is keen to participate in consolidation in the Italian wireless market, though it’s unclear whether it would accept the first bid from Iliad, according to the people.
Representatives for Iliad and Vodafone declined to comment. The Financial Times reported the value of Iliad’s bid earlier Wednesday, citing unidentified people.
Vodafone is looking for merger opportunities in the U.K., Spain, Italy and Portugal, Chief Executive Officer Nick Read said last week.
Activist investor Cevian Capital AB has taken a stake in the telecom operator and has been agitating for change, Bloomberg News has reported. Options to boost value at Vodafone could include consolidating its presence in key markets, selling some operations or pursuing stock buybacks, according to people with knowledge of the matter.
“Iliad’s reported 11 billion-euro offer for Vodafone’s Italian operation is too low, we think, to convince the carrier to exit a key market that accounts for 11% of sales,” said Bloomberg Intelligence analyst Erhan Gurses. “The price equates to 6.4x EV/Ebitda after leases vs. Vodafone’s 6.5x trading multiple and doesn’t reflect a fair share of significant synergy and consolidation benefits.”
Iliad’s mobile-services market share in Italy was just below 8% as of September, while Vodafone’s share was almost four times as large, according to the country’s communications regulator, Agcom.