Exclusive Report - Sources say INWIT investors are raising funds for a possible privatization deal

Updated report on October 11, with analyst comments added to paragraphs 11 and 12, and stock price information updated.

Elvira Pollina/Amy-Jo Crowley/Valentina Za

Reuters Milan/London, October 12 - According to two sources familiar with the matter, the main shareholders of INWIT INWT.MI are raising funds for a possible privatization deal for Italy’s largest mobile telecom tower company. This comes after the company became embroiled in a contract dispute with its two main clients (link).

According to the sources, French private equity firm Ardian and investment entity Oak Holdings 1 (the latter backed by co-investors GIP, Vodafone VOD.L, and KKR KKR.N) are exploring options to buy out minority shareholders in INWIT.

Ardian holds a 32% stake in INWIT, while Oak Holdings has 39%.

The sources said these investors are in talks with banks on financing a public tender offer. One of them added that as part of the plan, Abu Dhabi's investment company Mubadala is expected to take a stake in INWIT.

The sources cautioned that discussions are still ongoing.

Ardian, GIP, Vodafone VOD.L, KKR KKR.N, and Mubadala all declined to comment. GIP is part of the US investment company BlackRock BLK.N.

A spokesperson said the company has no information on the matter so far.

At 10:00 GMT, INWIT shares were up by around 1%. The stock had initially risen by as much as 5% following the report before paring gains.

According to data from London Stock Exchange Group (LSEG), as of last Friday’s close, INWIT’s market capitalization had dropped about 27% over the past year, to $7.1 billion (€6.3 billion).

Dispute with clients

INWIT was listed in Milan in 2015 and has been at the center of takeover speculation since February this year, when French media reported that infrastructure fund Ardian and investment group Brookfield were interested in privatizing the Italian company (link).

Subsequently, INWIT became embroiled (link) in a dispute with its two main clients—Telecom Italia (TIM) TLIT.MI and Fastweb, owned by Swisscom SCMN.S. Both companies have initiated the process to terminate their contracts with INWIT, aiming to renegotiate agreements on more favorable terms.

Brokerage Equita said it considers the takeover proposal “credible” but maintains a cautious stance.

“We believe any potential privatization deal would require the funds to have strong confidence in the outcome of negotiations and the resilience of the ‘Master Services Agreements’ (MSA) with TIM and Fastweb,” Equita said in a research note.

Barclays said that a potential change in ownership from such a deal could provide greater flexibility to address the current client-related challenges.

(1 euro = 1.1201 US dollars)

(To assist non-English speakers, Reuters has automated the translation of its reports into several languages. As automated translations may contain errors or lack the necessary context, Reuters does not guarantee the accuracy of the translated text, and it is provided solely for the convenience of readers. Reuters accepts no responsibility for any damages or losses arising from the use of automated translation functions.)