July 30, 2021

By Sudip Kar-Gupta and Mathieu Rosemain

PARIS (Reuters) -French tycoon Xavier Niel, the founder and controlling shareholder of telecoms firm Iliad, is making a 3.1 billion-euro offer ($3.7 billion) to buy the remaining shares in the company and take it private.

Niel is following the path of another billionaire, Franco-Israeli Patrick Drahi, whose personal holding took private the listed owner of SFR, France’s second-biggest telecoms group, earlier this year.

Rumours have circulated since 2018 that Niel could remove Iliad from the stock market as the company, which shook up France’s mobile sector with its low-cost offers, had a very volatile stock performance.

Niel’s decision to transfer most of its shares to a single “HoldCo” vehicle at the time also fueled speculation among analysts and investors about a possible take-private offer. Niel currently owns 71% of Iliad.

The influential businessman also has a myriad of separate personal investments in overseas telecoms firms, media and startups.

Niel’s offer gives the whole 100 percent of Iliad an equity market capitalisation of roughly 10.7 billion euros.

Niel’s offer price will be 182 euros per share, representing a premium of 61% to the closing share price on July 29. The offer for all the remaining shares Niel doesn’t own amount to a maximum of 3.1 billion euros, according to a regulatory filing.

“Iliad is now entering a new phase in its development, requiring rapid changes and major investments which will be easier to undertake as an unlisted company,” Niel, 53, said in a statement.

Iliad, whose rivals in France are Orange, Bouygues Telecom and SFR, has recently expanded its activities in Poland and Italy.

“It appears the bid is driven by the growing disconnect between public market’s perceptions of the outlook for the business and that of the main shareholder,” Credit Suisse said in a note.

In May, Iliad signaled that it would cut its free cash flow target to step up spending on its networks, sending shares sharply lower.

“Ultimately it appears that the controlling shareholder was keener to support a capex-heavy (capital expenditures) strategy than the stock market,” Credit Suisse added.

Iliad also posted estimated interim financial results showing a 17% rise in underlying earnings, while operating cash flow edged up by 22 million euros.

It said an increase in capital expenditure in France had offset lower losses at its Italian business. ($1 = 0.8410 euros)

(Reporting by Sudip Kar-Gupta and Mathieu Rosemain; additional reporting by Gwenaelle Barzeic; editing by Tomasz Janowski and Keith Weir)

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