* Telecom says Sawiris interested in buying newly issued shares
* Press reports say Sawiris could invest up to 5 billion euros
* Shares rise more than 6 pct to three-week high
By Danilo Masoni
MILAN, Nov 12 (Reuters) - Egyptian businessman Naguib Sawiris has offered to buy a stake in Telecom Italia, Italy’s largest telecoms company said on Monday after press reports that Sawiris could invest up to 5 billion euros ($6.4 billion).
Telecom Italia said a document from Sawiris had been read out at a board meeting on Nov. 8, adding that any evaluation on the offer would be made only once Telecom’s management verified it. The reported sum might buy over a quarter of the company.
Telecom Chairman Franco Bernabe told reporters in Turin that Sawiris’s interest showed “there is important value in the company”. He added: “We are pleased about this.”
Telecom Italia did not say how much Sawiris was prepared to invest, but said the offer would concern new shares, meaning the Egyptian tycoon would buy into a capital increase.
Both the Wall Street Journal and Italy’s Corriere della Sera newspaper said Sawiris was prepared to invest up to 5 billion euros in Telecom Italia.
At current market values, that would buy a stake in Telecom Italia of about 30 percent - the level beyond which a buyer would be obliged under Italian law to bid for the rest of the shares. Telecom Italia declined to comment on the value of the offer. In Cairo, Sawiris also declined to comment.
A big investment in heavily indebted Telecom Italia by the Egyptian entrepreneur would underscore the vulnerability of some of southern Europe’s big companies, hit hard by the euro zone crisis at a time when emerging-markets investors are awash with money.
Sawiris, who earlier this year told Reuters he wanted to get back on the acquisition trail and was eyeing businesses in Europe, the Middle East and Africa, has previously made a foray in Italy’s telecommunications market via mobile phone operator Wind. He later sold out to Russia’s Vimpelcom.
Telecom Italia, which is facing pressure on sales and margins due to Italy’s recession, is burdened with a net debt of 29.5 billion euros which it hopes to cut by 2 billion euros at the end of this year.
Its shares have fallen 18 percent in the past six months. At 1045, the stock was up 6.3 percent at 0.735 euros, after having hit its highest level in three weeks.
Telecom is controlled by an unlisted holding company, Telco, which owns 22.4 percent. Telco’s shareholders comprise Spain’s Telefonica, Assicurazioni Generali, Mediobanca and Intesa Sanpaolo.
A capital increase would dilute the current shareholders while injecting much-needed fresh cash in Telecom Italia to be used for investments and cutting debt.
Telecom’s board “reacted coldly” when it was informed about Sawiris’s offer, a source close the matter told Reuters.
However, an industry source familiar with the situation said the offer could be met with favour by Bernabe, who is keen to have a freer hand in running the company.
Telecom’s shareholders have had to write down the value of their stakes repeatedly in the past year. The company is also considering selling a stake in its 15-billion-euro fixed-line network to state-owned financial holding company CDP.
“In combination with abysmal numbers, and a company that has no credible plan for turnaround, these approaches must force Telecom Italia stakeholders to review their options, either embrace Mr. Sawiris or push management closer to the arms of a deal with the CDP,” said Bernstein analyst Robin Bienenstock.
“Either should create value for Telecom Italia shareholders.”