The British headquartered operator group said the offer was not in shareholders’ best interests
Vodafone has rejected an €11 billion bid for its Italian business from French billionaire Xavier Niel’s Iliad and its private equity fund partner Apax.
The operator group said it was “not in the best interests of shareholders” – which looks like it wanted a higher price, but as inflation is hitting the headlines everywhere, it is also worth noting that Iliad’s net debts were €7.4 billion last June, up from €3.7 billion the previous year, and ratio of debt:annual earnings is already at 2.75.
Apparently Iliad submitted the offer of more than €11 billionn for Vodafone’s Italian business on Saturday and it was spurned on Thursday.
After being rejected, Iliad said its offer was in cash, at a “very high premium” and that it would continue its stand-alone strategy.
The Financial Times quoted analysts at Barclays estimating Vodafone’s Italian business to have an enterprise value of €6.9 billion, equivalent to about 5.2 times its expected ebitda in 2022. The rejected offer was about seven times ebitda.
The company said in a statement, “Vodafone continues to pragmatically pursue several value accretive in-market consolidation opportunities to deliver sustainable market structures in its major European markets, including Italy.”
Havoc in Italy
Iliiad’s Free brand has wreaked havoc in the Italian market since launching cut-price, simple tariffs in 2018 and thereby attracting 8.5 million customers, although it is still the fourth largest after TIM, Vodafone Italy and Wind Tre.
Vodafone has about 24% of the market at the end of Q3 last year according to regulator Agcom, on par with the incumbent TIM, while Free (Iliad’s brand in Italy) has about 9%.
Iliad is controlled by French billionaire Xavier Niel which he delisted last year with the intention of European expansion.
Vodafone’s CEO, Nick Read, reiterates he wants to divest or merge assets in its smaller markets and is under pressure to do so from activist investor Cevian Capital and others.
Maybe he’s still hoping for a better offer.