UPDATE 1-Sawiris must pay twice market price for T.Italia -investor

Mon Nov 26, 2012 9:16am EST

By Stefano Rebaudo

MILAN Nov 26 (Reuters) - Any offer for Telecom Italia from Egyptian businessman Naguib Sawiris, who has said he wants a stake, must value the group at more than twice its market price or be rejected, its third-biggest shareholder said on Monday.

Debt-laden Telecom Italia, which is considering a possible bid for Vivendi's Brazilian unit GVT as part of a strategy review, has attracted the attention of Sawiris, who could invest billions of euros in the company by taking new shares.

"A correct price would be the one that most shareholders have on their books, which is around 1.5 euros per share," Marco Fossati, whose family's Findim Group SA owns 5 percent of Telecom Italia, told Reuters.

At 1402 GMT, Telecom Italia shares were trading at 0.695 euros, down 0.9 percent, underperforming the European telecom sector index, which was down 0.4 percent.

It is not clear how big an investment Sawiris wants to make, but media reports have suggested a range of 2 billion to 5 billion euros ($2.6-6.5 billion), a rare cash-raising opportunity for a group caught for years between the need to pay dividends and keep its investment grade rating.

A 3-billion-euro cash call priced at 1.5 euros per share would make Sawiris the largest single investor in the Italian group, with a stake of nearly 13 percent after the capital hike, ahead of Spain's Telefonica, which has an indirect stake of around 10 percent.

"The operation must be carried out at a right price and must create value. In the absence of these elements, I think it would be in the interest of all shareholders to let the offer decay," said Fossati.

Telecom Italia is controlled by Telco, a holding company owned by Telefonica and a group of three Italian financial institutions. Telco has 22.4 percent of the former monopoly.

Analysts said a capital increase priced below 1.5 euros would be too dilutive for existing shareholders and would force Telco investors to further write down their stakes.

"I seem to have understood there is no specific or detailed offer ... We're waiting for his next move," said Fossati.

The possible investment of Sawiris will be discussed at a Telecom Italia board meeting on Dec. 6 along with other key strategy issues such as the GVT bid and the possible sale of a stake in the group's Italian fixed-line network.

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