Hutchison Whampoa said on the weekend it was planning to sell 10 per cent of 3 Italia in a private placement that values the mobile business at €9bn (US$10.7bn), after the company, controlled by Li Ka-shing, scrapped the planned listing of the operation.
The valuation was lower than the €12bn sought by Hutchison earlier, reflecting poor investor sentiment towards 3 Italia and the European telecommunications market, analysts said.
Hutchison, which has invested more than €20bn in third-generation mobile technology, suffered a major setback last week when it was forced to pull the listing of 3 Italia, which was planned in Milan for this quarter.
The Hong Kong-based group has hoped that a successful spin-off of its Italian operation would lend support to the planned listings of some of its other 3G operations elsewhere. Its latest failure has cast doubts on similar plans for 3 UK, which was expected to go public this year.
Canning Fok, managing director, blamed weak conditions in Europe for the delay. He said the company would work on educating investors about its business, and plan to relaunch the initial public offering, without giving any timetable.
“3 Italia is not experiencing the same negative operating performance or outlook as incumbent mobile operators in Italy and Europe,” Mr Fok said.
He also said Goldman Sachs, one of Hutchison’s sponsors in the shelved listing, would underwrite a €420m placement of 3 Italia to independent investors, giving the business an enterprise value of €9bn, based on estimated net debt of €4.8bn at the end of this year.
“We feel that €9bn is a fair value, not overly exciting, and its an objective value that we can put before shareholders and give them a benchmark to look at our business,” Mr Fok told reporters in Hong Kong.
Holders of the placed shares will have the right to swap them for 3 Italia IPO shares, and can sell them back to Hutchison in three years. The transaction is expected to be completed by March.