Milan - Italian Prime Minister Matteo Renzi’s government rejected a bid by Silvio Berlusconi’s EI Towers SpA to acquire a state-controlled competitor because it considers the business strategic.
The government doesn’t want to sell its 51 percent stake in RAI Way SpA “considering the strategic importance of the infrastructure”, the Economic Development Ministry said on Wednesday. It cited a September decree that required state broadcaster RAI to keep at least 51 percent.
EI Towers late on Tuesday announced a 1.23-billion-euro offer in cash and stock for rival RAI Way. The merger “aims to create a single operator of broadcasting towers in Italy”, EI Towers said in a statement.
EI Towers fell as much as 2.4 percent and traded 0.1 percent lower at 47.94 euros as of 10:24 a.m. in Milan. RAI Way dropped 1.7 percent to 3.98 euros. Mediaset SpA, Berlusconi’s media company, lost 0.6 percent to 4.03 euros.
Italy’s competition regulator said Wednesday it will review EI Towers’ offer to see if it meets the country’s antitrust rules.
“Renzi’s government gave an extremely restrained reading of last September’s decree on privatisations, which had the immediate effect of stopping a well-thought-out offer by EI Towers,” said Carlo Alberto Carnevale Maffe, a professor of business strategy at Milan’s Bocconi University.
EI Towers is offering 3.13 euros in cash plus 0.03 new EI Towers common shares for each RAI Way share. That values the Rome-based company’s stock at 4.50 euros each, or 22 percent higher than February 23’s closing price of 3.69 euros.
Berlusconi’s Elettronica Industriale SpA owns 40 percent of EI Towers, while BlackRock is the second largest investor with 10.3 percent. EI Towers shareholders will meet March 27 to approve a capital increase for the transaction.
Earlier this month Berlusconi raised 377 million euros from the sale of a 7.8 percent stake in his broadcaster Mediaset SpA as he seeks to strengthen the finances of the family’s investment company.
Bloomberg