Iliad’s €11.25 billion bid was rejected by Vodafone Group, who said that the deal was ‘not in the best interests of shareholders’

Earlier this week, it was reported that French telco Iliad, owned by billionaire Xavier Niel, had submitted a takeover bid for Vodafone Italy. 

The move would constitute a major shakeup for the Italian telecoms landscape, reducing the number of mobile players in Italy from four to three and creating a new entity of scale enough to challenge the dominance of market leader TIM.

Now, however, details of the deal have come to light, with Vodafone formally announcing its rejection of the proposed deal. 

Iliad, in conjunction with private equity firm Apax Partners, reportedly offered the UK telecoms group €11.25 billion, describing the bid as “very high” for Vodafone Italy’s assets. 

At the time, Karen Egan, an analyst at Enders Analysis, said that the offer was a good one, reflecting the benefits Iliad would enjoy as part of a more consolidated Italian market, suggesting that Vodafone should “take the money and run”. 

Other analysts, however, were less optimistic, arguing that this bid still undervalued Vodafone Italy. Analysts at Jefferies said that the bid implied an enterprise value to core earnings multiple of 7 times, which was likely too low. Last week, commenting on rumours surrounding a takeover bid, Deutsche Bank analyst Robert Grindle said that he expected the “the multiple to begin with an 8 not a 7”.

It seems Vodafone agrees with this assessment, saying that accepting the offer “was not in the best interest of shareholders”. Instead, the operator says they will continue with their “organic growth strategy over the medium-term and ongoing portfolio optimisation”.

While this specific deal has been rejected, it seems unlikely that talk of M&A surrounding Vodafone’s Italian business will dry up any time soon. Vodafone Group CEO Nick Read has been very vocal about calling for consolidation across Europe in recent months, with potential tie ups also reportedly being discussed in numerous markets, including the UK and Spain. 

Similarly, earlier this month, Cevian Capital was revealed to have taken a stake in Vodafone, with the activist investor notably pushing the Group towards consolidation.


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