Vodafone shares up as Iliad proposes Italian merger

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Iliad said on Monday it had submitted a proposal to Vodafone to merge their Italian units, a move that would combine its fast-growing consumer base with the British company’s strength in business in a highly competitive market.

Shares in Vodafone, which said last month it was reviewing options for its Italian operation, rose 5.5% in early trading on the Iliad joint-venture proposal, which Reuters first reported on Friday.

The French company’s move comes as Vodafone also explores a potential deal with Swisscom’s Fastweb Italian unit, a source familiar with the matter said.

Iliad, which only launched in Italy six years ago, said the merged business would be expected to generate revenues of around 5.8 billion euros ($6.34 billion) and core earnings (EBITDA) of approximately 1.6 billion euros for the year ending March 2024.

Under the plan, Vodafone would receive 50% of the share capital of the newly merged business, together with a cash payment of 6.5 billion euros and a shareholder loan of 2.0 billion euros to ensure long-term alignment, Iliad added.

Iliad offered 11.25 billion euros to buy Vodafone Italy outright last year but was rebuffed.

It said its new joint-venture proposal implied an earnings multiple of 7.8 times, which was higher than the 7.1 times multiple offered last year.

Shares in Telecom Italian rose 2%, while Swisscom was up 0.9%.

Vodafone did not immediately respond to a request to comment.

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