Hutchison confirmed “exploratory negotiations” with VimpelCom about forming an equal joint venture in Italy through a merger of their respective Italian operations.
A deal between 3 Italia and Wind is subject to reaching agreement on terms, signing a definitive agreement, achieving satisfactory debt levels and obtaining all necessary corporate and regulatory approvals, Hutch cautioned in a statement to the Hong Kong stock market.
The statement warned the talks may or may not result in a transaction.
The news is hardly breathtaking since it has been known the two firms have been in talks about an Italian tie-up for some time.
The announcement confirms that, despite Hutch’s concurrent negotiations to acquire O2 in the UK, it has not lost appetite for dealmaking in Italy.
VimpelCom CEO Jean-Yves Charlier yesterday (13 May) made a similar statement to the effect the two firms were negotiating an equal joint venture between 3 Italia and Wind, while also issuing a warning about the obstacles to a deal.
Europe’s coming together
Cutting the number of Italian competitors from four to three would follow similar consolidation in Germany, Austria and Ireland. Hutch’s proposed purchase of O2 in the UK would also reduce rivals from four to three. Aborted attempts at consolidation have also been made in France.
A 3 Italia-Wind combination in Italy would hold roughly one-third market share, putting it on a par with rivals Telecom Italia and Vodafone.
According to Bloomberg, Hutch and VimpelCom have agreed that Wind’s chief executive, Maximo Ibarra, would lead the combined entity.
Hutch’s recent deal-making has focused on taking control of other operators but a joint venture in Italy might suit, since its balance sheet has taken a hammering recently. And Wind is heavy with debt.