Swisscom to bid $4.9 bln for Italy's Fastweb
ZURICH (Reuters) - Swiss telecoms group Swisscom (SCMN.VX) has proposed a 3.7 billion euro ($4.9 billion) friendly takeover of Italian broadband operator Fastweb (FWB.MI), in a bid to break out from its stagnant home market.
State-controlled Swisscom said on Monday it would offer 47 euros per share for Fastweb, a 19 percent premium to its price on Friday, before takeover rumors pushed it sharply higher.
But Fastweb shares leaped over the offer price to a high of 49.06 euros on speculation of a counterbid. Swisscom shares fell sharply as some analysts called the offer expensive.
Fastweb's board welcomed the bid and urged Swisscom to make the offer as soon as possible. The company's chairman and large shareholder Silvio Scaglia said he was ready to hand over his 18.75 percent stake unless a better offer emerged.
Sources close to Vodafone (VOD.L) and Sky Italia NWS.N told Reuters they were unlikely to launch counterbids for Italy's number-two fixed-line telecoms operator.
"Although the offer is friendly, the market is betting on other operators possibly jumping into the game," said a Milan-based trader.
The bid is the first major foray abroad for Swisscom since the government imposed restrictions on foreign purchases in 2005, blocking its play for Ireland's Eircom.
"The business is strategically meaningful and opens new growth opportunities for Swisscom," the Swiss government said.
A Fastweb takeover would help strengthen the former monopoly's profile with the latest optic-fibre, voice and broadband technologies, and add rising income from neighboring Italy to its stagnant domestic revenues.
It would also see yet another Italian telecom firm pass into foreign hands.
Swisscom said the deal was contingent on obtaining more than 50 percent of Fastweb. Swisscom would fund the deal via debt and by placing up to 4.9 million shares it holds.
END TO BUYBACKS
Swisscom Chief Executive Carsten Schloter said Fastweb would remain independent. "We won't centralize any kind of function. We will continue to invest in Italy," he said.
Once the deal was completed, Swisscom would change its payout policy, ending share buybacks, with the exception of the 500 million franc buyback planned for 2008. After that, it would pay dividends amounting to about half of net income.
Swisscom said the deal would start boosting the combined group's earnings per share starting in 2009 and would boost revenues and core earnings before interest, tax, depreciation and amortization (EBITDA) by about a fifth. Continued...
