Italy's INWIT shares rise on potential Ardian approach despite spat over contracts

By Elvira Pollina and Valentina Za

MILAN, March 24 (Reuters) - Shares in Italy's largest mobile telecom towers company INWIT INWT.MI rose as much as 10% on Tuesday after newspaper Il Sole 24 Ore reported that French fund Ardian was still working with Brookfield on a potential bid to take it private.

Ardian, INWIT's second-biggest shareholder, is working with advisers on a range of options for the towers company, two people close to the matter told Reuters.

The price of a potential bid posed a hurdle, they added, and no decision had been taken despite efforts to reach one by early April.

INWIT, which has been listed since 2015, has been the subject of takeover speculation since a French media report last month that infrastructure fund Ardian and its partner Brookfield were interested in taking the Italian company private.

Ardian, which owns a 31% stake in INWIT, and Brookfield declined to comment.

LEGAL ESCALATION

The sources said the situation around a potential takeover approach was complex as INWIT remained at odds with its main customers Telecom Italia (TIM) TLIT.MI and Fastweb over the terms of key service contracts.

Born as a spin-off of TIM's mobile tower assets, INWIT merged with Vodafone's Italian mast business in 2020. Fastweb inherited the related contract with INWIT through its acquisition of Vodafone Italy.

INWIT shares fell nearly 29% last week after Fastweb and TIM launched a joint venture to build up to 6,000 towers as part of a push to renegotiate contracts with INWIT.

The towers company is resisting the move to renegotiate contracts, saying it would be an unjustified revision of their original terms. The contracts generate nearly 85% of INWIT's revenue.

TIM and Fastweb could issue a contract termination notice by the end of March, based on the anchor tenants' interpretation that the current agreements could end in 2028. INWIT sees no legal ground to support such a move.

Fastweb is expected to hold a board meeting later this week to discuss the matter, a third person familiar with the matter said. The company declined to comment.

ARDIAN INTEREST CREDIBLE BUT OUTLOOK RISKY, ANALYST SAY

Analysts at Equita noted that renewed interest from Ardian and other potential bidders appeared credible, as a deal could help the fund reduce its average entry valuation, which currently stands at more than double INWIT’s present market multiple.

However, broker Intermonte warned that potential legal disputes with INWIT’s main clients could weigh on the company’s prospects, and any de‑listing attempt would be complicated by uncertainties surrounding arrangements with its anchor tenants.