Mediaset and F2i launch bid for EI Towers, spur sector tie-up hopes

By Stephen Jewkes and Paola Arosio

MILAN (Reuters) - Italy's biggest commercial broadcaster, Mediaset, has joined forces with infrastructure fund F2i to launch a takeover bid for masts group EI Towers, in a move widely expected to spur further consolidation in the sector.

F2i and Mediaset, which already owns 40 percent of EI Towers, have offered 57 euros per share for the group, valuing it at 1.61 billion euros ($1.89 billion).

The masts sector has attracted investors looking for infrastructure assets that offer steady returns thanks to companies' multi-year hosting contracts. Analysts also see scope for consolidation, though past merger attempts have hit opposition from the state, seeking to protect national interests.

Shares in EI Towers, which was created in 2012 when Mediaset merged its tower business with rival DMT Group, rose more than 15 percent to reach a peak of 57.10 euros. Mediaset was up 2.5 percent.

The news also benefited state-controlled rival Rai Way, which owns and manages the TV towers of national broadcaster RAI, on hopes the two masts groups could eventually join forces. Rai Way stock jumped 18 percent.

"We see this deal as likely to herald increased M&A in the Italian tower segment, with greater prospects for another bid for Rai Way in due course, or for telecommunications infrastructure assets should they become available," broker Berenberg said in a report.

The Mediaset-F2i bid was launched through a special purpose company called 2i Towers, indirectly controlled by F2i. Mediaset, controlled by the family of former Prime Minister Silvio Berlusconi, will hold a 40 percent stake in the vehicle.

"EI Towers will acquire the role of an independent operator, a status that will (allow it) to participate more effectively in the process of consolidation in the broadcasting and telephone towers business," Mediaset said in a statement.

EI Towers, which operates masts for the transmission of TV and mobile phone signals, attempted to take over Rai Way in 2015, but the plan met resistance from Italy's then centre-left government, which wanted to keep a stake of at least 51 percent.

A F2i-Mediaset takeover would make a tie-up between the two more likely as it would result in EI Towers becoming a private company with a state-sponsored entity - F2i - holding a controlling stake. Italy's state fund Cassa Depositi e Prestiti (CDP) owns around 14 percent of F2i.

Equity analysts said such a combination would now have a greater chance of success "as it would be F2i and not Mediaset driving it".

A source familiar with the matter told Reuters Rai Way was interested in a combination with EI Towers "but under certain conditions, starting with the price".

Mediaset Chief Executive Pier Silvio Berlusconi said last year the broadcaster was open to loosening its grip on EI Towers in case Rai Way launched an offer on its bigger rival.

Any future deal will depend, however, on the stance of the new anti-establishment government in Italy which came into power last month and could seek to block any operation it sees as a threat to national interests.

La Repubblica daily said F2i and Mediaset could seek in a second step to separate EI Towers' broadcast masts from the telecoms ones, merge the former with Rai Way and sell on the telecoms infrastructure, citing Spain's Cellnex as a potential buyer.

Italy's Benetton family last week completed the purchase of a 29.9 percent stake in Cellnex, citing strong growth prospects for the Spanish masts group.

Credit Suisse, Mediobanca and Intesa Sanpaolo advised F2i while UniCredit advised Mediaset.

($1 = 0.8523 euros)

(Additional reporting by Francesca Landini in Milan, Massimiliano Di Giorgio in Rome; writing by Valentina Za and Francesca Landini)