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At least five private equity firms are studying a purchase of Fastweb, the fast-growing Italian broadband company which has just started a review of its future strategy.
However, any deal is very unlikely until next year.
Fastweb has a market capitalisation of over €3bn ($3.5bn) and has grown in a few years to be the second-largest company in its sector after Telecom Italia.
A few weeks ago it hired Deutsche Bank to look at strategy against a backdrop of consolidation in the industry and market rumours that rivals might be preparing a bid.
At this early stage it is private equity firms, many of which have shown tremendous appetite for telecoms assets this year, that are leading the way in informal contacts with the company.
Apax Partners, Providence Equity and Permira, which are involved in the TDC offer, plus BC Partners and Carlyle Group have all been in touch, people close to the process said.
Neither Fastweb nor its advisers would comment on Thursday and none of the private equity firms has commented.
Deutsche Bank, the people said, was likely to prepare its recommendations and compile expressions of interest in March or April next year.
Fastweb at the moment is thinking of a sale to a private equity group or groups, the sale of a large stake to an industry rival, or doing nothing.
The takeover of the whole company by a rival is not currently being contemplated, but nor has it been ruled out, the people said.
Fastweb has one of the more diverse groups of shareholders among Italian listed companies.
Silvio Scaglia, chairman and founder, owns 25 per cent of the company with the rest dispersed among a broad group. One other large shareholder recently sold his 10 per cent stake.
Mr Scaglia has expressed interest in selling most or all of his stake.
He is well known as an entrepreneur focusing on start-ups and seems to have decided Fastweb is beyond its first stage. Before Fastweb, Mr Scaglia was chief executive of Omnitel, now part of Vodafone.
However, the company said recently that Mr Scaglia would not reduce his stake before Deutsche Bank had completed its work and the company had announced its plans.
If private equity groups mounted a bid for the company, that would be likely to end its status as a public company. Fastweb is anxious to pursue a transaction which treats all shareholders equally, and that would probably mean launching a tender offer for all of the company.
Fastweb’s revenues this year are set to be about €1bn from which it will record earnings before deductions of about €300m, the same amount as its net debt. It hopes to break even by the end of next year.
The company has about 700,000 customers, up from 500,000 last year, and specialises in offering them “triple-play” – a package of broadband internet, telephony and television.
Additional reporting by Peter Smith in London.