Italo shareholders accept GIP's improved takeover offer, scrap IPO plans

MILAN (Reuters) - The shareholders of Italian railways group Italo have accepted a 1.98 billion euro ($2.43 billion) takeover offer by Global Infrastructure Partners (GIP) and scrapped plans for listing the company on the Milan bourse.

Italo' high-speed train for the NTV (Nuovo Trasporto Viaggiatori) is seen at the Termini railway station in Rome, Italy, March 18, 2016. REUTERS/Stefano Rellandini

The U.S.-based infrastructure fund raised its offer for all of Italo late on Wednesday from an initial bid of 1.9 billion euros, excluding debt.

The new offer includes an equity value for Italo of 1.94 billion euros, the promise to pay out 30 million euros in already promised dividends and another 10 million euros to cover for the cost of dropping the planned listing.

Italo had planned to offer up to 40 percent of its capital in an initial public offering (IPO) slated for later this month.

Under the GIP offer, Italo’s shareholders can reinvest in the group and buy up to 25 percent of the railway operator.

Italo aims to expand further at home and to export its business model abroad so being part of GPI, a U.S.-based infrastructure fund that manages assets worth 40 billion euros, could help further those ambitions.

Accepting the GIP offer - which arrived just days before Italo was expected to set a price range for its IPO - will give the company’s shareholders the opportunity to cash in on an investment that took a decade to turn a profit.

Based on initial interest from potential investors during the IPO’s pre-marketing, the GIP offer also presents an upside to the valuation that would have likely emerged through the share offering, two sources close to the matter have said.

By selling their shares, however, investors miss out on any potential share price increase and dividend payments that Italo - a business with a core profit margin of around 35 percent - might have offered in the future.

Italo’s founders, including former Ferrari boss Luca Cordero di Montezemolo, invested a combined 1 billion euros in the start-up in 2006, seeking to challenge Italy’s state-owned Ferrovie dello Stato on high-speed routes across the country.

Arriving just weeks before Italy’s national election on March 4, the takeover bid removes any uncertainty Italo could have faced if it had pursued its listing plans. It also shows there is appetite for Italian assets despite the looming vote.

GIP was advised in the deal by Italian investment bank Mediobanca MDBI.MI.

Additonal reporting by Elisa Anzolin; editing by Toby Chopra, G Crosse