Two groups of investors made offers on Friday for control of Wind, the telecommunications arm of Enel, Italy's biggest utility, which values the entire business at 12.9 billion euros (US$16.8 billion), setting the stage for one of Europe's largest-ever leveraged buyouts.
On Friday morning, a consortium of private equity investors headed by the Blackstone Group submitted an offer worth about 11.5 billion euros (US$15 billion), according an executive close to the bidding. The buyout firms Permira and Providence Equity Partners and the investment bank Goldman Sachs are the other investors in the group.
Several hours later, a second group headed by Naguib Sawiris, an Egyptian telecommunications executive, submitted a counter-offer, said another executive, who declined to disclose any details. Sawiris is the head of Orascom Telecom Holdings, which has operations across nine countries in the Middle East and Africa. He joined with the US financier Wilbur Ross and the French investor Philippe Nguyen to make a bid.
The two offers are understood to be for about three-quarters of Wind. Enel has said previously that it would like to retain 25 percent to 30 percent of the company, even if it turns over control to someone else. Enel would not provide any details about the bids on Friday.
"We will evaluate all possible offers," said Roberta Vivenzio, a spokeswoman for Enel.
Enel said late last year that it hoped to spin off Wind in a public offering but that it would also consider bids for the company.
"The preferred option remains an IPO," Vivenzio said on Friday. Enel has hired Morgan Stanley and an Italian law firm, Chiomenti, to evaluate the bids. Enel might be able to raise more money with a sale than a public offering, some bankers and analysts have said.
A purchase of Wind would leave any buyer highly leveraged. Both of the groups that made bids are expected to use loans to finance a large part of their offers. These will be in addition to Wind's sizable debt load. Enel carries Wind on its balance sheet at 6.3 billion euros in equity and 6.7 billion euros in debt.
Wind is Italy's third-largest mobile phone carrier behind Telecom Italia and the Italian operations of Vodafone. It is also the country's second-largest fixed line operator behind Telecom Italia. It has 28 million customers, including Internet users. The company reported 4.4 billion euros in revenue in 2003, the latest full-year data available.
Enel has a board meeting scheduled for Wednesday, when it is expected to evaluate both bids. A winner could be declared in mid-April, one executive close to the utility company said.
Citigroup and Lehman are advising the Blackstone-led group, and Citigroup, Goldman Sachs and JP Morgan Chase are providing financing for the offer. Four banks, including SanPaolo IMI of Italy, ABN Amro, Rothschild and UBS are advising Sawiris' group.