Under the structure of the proposed deal, Mediaset will take a 40% stake in the bidding company, meaning that the broadcaster will not take cash out of the transaction but will remain a minority shareholder in the tower business.
Mediaset said it had decided to invest in 2i because of the important structural role that the transmission towers outfit plays in the TV business. Under the new structure, it said, EI Towers would act as an independent operator, making it easier to participate in the consolidation of the TV transmission and mobile towers business in the country and internationally.
Analysts at Berenberg described the €57 a share price tage as “fair” and “bang in line with our target share price”. It said the valuation was “based on a combination of the valuation of the standalone entity, and an element of upside relating to the benefits that might accrue from industry consolidation”.
EI Towers previously made an unsuccessful bid for rival towers business RaiWay and for Inwit, and management remains keen to drive consolidation in the Italian market. The RaiWay bid failed because the Italian government did now want to give up control of the asset and was concerned about vertical integration of the business with the country’s largest commercial broadcaster. EI Towers failed to strike a deal to take control of Inwit because Telecom Italia decided to retain control of the outfit.
Berenberg said that the F2i deal should remove concerns about Mediaset by making it a minority partner in the business rather than the controlling shareholder, reducing concerns about vertical integration and political interference because Mediaset is controlled by the Berlusconi family. The analysts said they believed Mediaset would now deconsolidate EI Towers to give it more strategic and financial flexibilty.
“We therefore see this deal as likely to herald increased M&A in the Italian towers segment, with greater prospects for another bid for RaiWay in due course, or for telecommunications infrastructure assets should they become available. In retaining its stake in the bidco,” Berenberg said.
“Mediaset should be able to benefit from any value uplift created as a result of such dealmaking.”