* Prysmian CEO raised possibility of tie-up - report
* Prysmian shares down 4 pct, Nexans shares flat
* Any such deal would face regulatory, political hurdles
(Adds context on campaign to oust Nexans boss, updates shares)
MILAN, May 9 A source close to Italy's Prysmian
, the world's biggest cable-maker, and officials at
France's Nexans, its loss-making rival, on Friday
dismissed a report they were looking at a possible merger.
Italian daily La Repubblica reported, without citing
sources, that Prysmian Chief Executive Valerio Battista had
raised the possibility of a tie-up at a closed-door lunch at
Italian investment bank Mediobanca.
Speculation about a possible combination comes before a
shareholder meeting next week called to vote on a resolution by
activist investor Amber Capital to oust Nexans Chairman and
Chief Executive Frederic Vincent from the board.
A merger between the two groups would face regulatory and
political hurdles, however, and analysts saw it as unlikely.
Prysmian said it does not comment on media speculation, but
a source close to the Italian company said it was not studying
any deal involving Nexans.
Separately, Nexans said in a statement it had not initiated
any contact and had no further comment.
Amber, the fourth-largest investor in Nexans with a 5.5
percent stake, is protesting against what it sees as poor
performance since Vincent took the helm in 2009. An Amber
official has said the performance gap between Nexans and
Prysmian "has been widening year after year".
Prysmian and Nexans have similar revenue, but the market
value of the French company is much smaller. That could make
Nexans an attractive target for Prysmian CEO Battista, who has a
good track record in integrating companies.
By 1248 GMT, Prysmian shares were down 4 percent, adding to
heavy losses on Thursday, when the company said it could not
rule out further losses due to technical problems at its Western
Link high-voltage project in Britain.
Nexans shares in Paris were little changed.
According to the Italian newspaper, Battista believed a deal
would first have to be solicited by Nexans, in which sovereign
wealth fund Bpifrance holds a stake.
A tie-up would trigger antitrust problems, especially in the
business of submarine cables. It would involve significant
industrial overlaps in central and southern Europe and in South
A Milan analyst said the French government was unlikely to
let a foreign group take control of Nexans, which is undergoing
a tough restructuring. The company had to raise new share
capital in October due to a lack of growth in Europe and
Prysmian has said it is open to growth through acquisitions.
It overtook Nexans to become world leader in 2011 when it bought
rival Draka for 1.3 billion euros ($1.8 billion).
($1 = 0.7214 euro)
(Reporting by Danilo Masoni; Additional reporting by Brian Love
in Paris; Editing by Lisa Jucca, Jane Baird and Dale Hudson)