Rai Way, EI Towers owners fail to agree Italian TV towers tie-up (updated)

Rai Way SpA

Yesterday 06:26

June 30 deadline missed amid valuation differences 
Rai Way's top investor says no shared basis for negotiations
Rai Way's shares drop as much as 7%
writes thorough with details in paragraphs 3, 5, stock move in 8, analyst comment in 10
By Elvira Pollina

    MILAN, July 1 (Reuters) - Leading shareholders in Italian broadcast tower operators Rai Way RWAY.MI and EI Towers failed to reach a merger agreement by a June 30 deadline, broadcaster RAI said on Wednesday, ending prospects of a deal under the current framework. 
Talks over a tie-up between Milan-listed Rai Way, 65% owned by RAI, and rival EI Towers aimed to create a national broadcast tower champion worth around €4 billion ($4.6 billion).
EI Towers is 60% owned by Italian infrastructure fund F2i, with the remainder held by Italy's largest commercial broadcaster, MFE-MediaForEurope MFEB.MI, which is controlled by the family of late former Prime Minister Silvio Berlusconi.
"Following the discussions held, the assessments carried out did not allow for the identification of a shared and adequate basis to proceed with the transaction," RAI said in a statement. 
MFE and F2i declined to comment.

SHARES FALL
Sources familiar with the matter told Reuters the parties failed to bridge differences over the valuation of privately held EI Towers.    
One source said MFE, EI Towers' main customer, was willing to extend its service contract with the tower operator until 2047, as requested by RAI, but wanted a larger stake in the combined company in return. The proposal was not pursued in last-ditch talks, the source said.
Under terms discussed in the final round of negotiations, RAI would have retained a 51% stake in the combined group and appointed the CEO, the source added. 
Shares in Rai Way fell as much as 7% in morning trades on Wednesday, while MFE's B-shares were down 1%.
According to an analysis carried out by the two companies, a Rai Way-EI Towers merger would generate benefits of more than 10% of their combined cost base of €200 million, Reuters reported last year. 
Analysts at broker Equita said they saw limited scope for a re-rating of Rai Way's shares on a standalone basis, adding that RAI could revisit the option of selling a 15% stake in Rai Way. 
Efforts to merge Rai Way and EI Towers date back more than ​a decade, but valuation disputes and political wrangling have repeatedly derailed a deal.
The latest talks stemmed from a memorandum of understanding signed in December 2024 by state-owned RAI, F2i and MFE. The agreement was extended by two weeks earlier this month after parties missed previous end-September and end-March deadlines. 
($1 = 0.8775 euros)

 (Reporting by Elvira Pollina.  Editing by Cristina Carlevaro and Mark Potter)
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