Deadlock in 3 Italia IPO price
Hutchison Whampoa and its bankers were last night locked in a bitter disagreement over the valuation of the conglomerate's Italian mobile subsidiary, according to sources.
The wrangling comes before a 3 Italia board meeting next week to decide whether to proceed with an initial public offering of up to Euro2 billion ($18.58 billion), a source said.
The rift between management and bankers over the valuation or the pricing range might jeopardise the listing of the Milan-based 3G player even though the spin-off had cleared all regulatory hurdles, the source added.
Although Hutchison is understood to have conceded to a lower enterprise value (EV) for 3 Italia - or the value of its market capitalisation plus debt - of Euro8 billion, some bankers believe that the EV should be as low as Euro6 billion to Euro7.5 billion because of poor market sentiment for telecommunications stocks.
'Negotiation is always very challenging, especially for a benchmark deal like this,' said a banker before the final stage of talks were due to begin last night.
Since last August, the poor share price performance of top operator Vodafone has dragged the Bloomberg European Telecommunication Services Index down 8.5 per cent on concern that growth in the industry is slowing.