Telcos consolidate: Swisscom buys Vodafone Italia in €8.7bn deal

BY Fraser Tennant

In the latest round of telecommunications sector consolidation in Europe, Swisscom AG is to acquire 100 percent of Vodafone’s Italian business in a transaction valued at €8bn.

The Swiss government-controlled Swisscom intends to merge Vodafone Italia with Fastweb, Swisscom’s Milan-based subsidiary. The deal will create Italy’s second-biggest fixed-line broadband operator behind Telecom Italia Mobile.  

The acquisition is a key step for Swisscom to achieve its strategic objective of profitable growth in Italy, bringing together complementary high-quality mobile and fixed infrastructures, competencies and capabilities to create a leading converged challenger in a market with material growth opportunities.

The deal follows the merger of French mobile operator Orange’s Spanish business with rival MasMovil in February 2024 and Vodafone selling its Spanish unit to Zegona Communications in October 2023.

“Through this transaction, Swisscom significantly reinforces its presence in Italy, where it has been operating successfully since 2007 through Fastweb,” said Christoph Aeschlimann, chief executive of Swisscom. “Fastweb has grown by over 50 percent in terms of customers, revenue and adjusted earnings before interest, taxes, depreciation and amortisation over the past 10 years, and has established itself as a leading challenger in Europe’s fourth largest broadband market.”

Swisscom has targeted €600m in annual savings mainly from migrating mobile customers from Fastweb to the Vodafone network, enabling the combined entity to unlock significant value for all stakeholders, sustain investments in the Italian telecommunication market and offer innovative, competitively priced converged services.

“The sale creates significant value for Vodafone and ensures the business maintains its leading position in Italy, which has been built through the dedicated commitment of our colleagues to serving our customers over many years,” said Margherita Della Valle, group chief executive of Vodafone. “Our transactions in Italy and Spain will deliver €12bn of upfront cash proceeds and we intend to return €4bn to shareholders via buybacks, as part of our broader capital allocation review.”

The transaction, which is expected to close in the first quarter of 2025 and does not require a shareholder vote, is subject to regulatory and other customary approvals.

Mr Aeschlimann concluded: “By combining Fastweb’s strengths in fixed connectivity with Vodafone Italia’s leading position in mobile services, the new entity stands to deliver substantial benefits to Italian consumers, businesses and the country.”

News: Swisscom buys Vodafone Italia for $8.7 billion as telcos consolidate

EQT to acquire Equitrans Midstream Corp in all-stock deal

BY Richard Summerfield

EQT Corporation and Equitrans Midstream Corporation have announced a merger agreement which will create a natural gas business with an initial enterprise value over $35bn.

The deal will see leading US natural gas producer EQT acquire its former pipeline unit in an all-stock transaction that values Equitrans at around $14bn including debt.

Under the terms of the deal, each outstanding share of Equitrans common stock will be exchanged for 0.3504 shares of EQT, giving the deal an equity value of about $5.5bn. The deal is expected to close in the Q4 2023. Upon completion, EQT shareholders will own about 74 percent of the combined company and Equitrans shareholders will own the rest.

The transaction will help in facilitating lower-cost production and transportation of natural gas by adding more than 2000 miles of pipeline infrastructure, the companies said on Monday. Equitrans was spun out from EQT in 2018 when the midstream operations were separated from the gas production business.

“Equitrans is the most strategic and transformational transaction EQT has ever pursued, and we see this as a once in a lifetime opportunity to vertically integrate one of the highest quality natural gas resource bases anywhere in the world,” said Toby Z. Rice, president and chief executive of EQT. “As we enter the global era of natural gas, it is imperative for US natural gas companies to evolve their business models to compete on the global stage against vertically integrated rivals.

“We have identified multiple, high confidence near-term synergies, with significant upside from future infrastructure optimization projects that we believe will drive material value creation for shareholders over time,” he continued. “Our modern, data-driven operating model, first-hand knowledge of Equitrans' operations and successful track record integrating $9 billion of acquisitions, all of which included midstream assets, gives me tremendous confidence in EQT's ability to seamlessly combine the two companies and capture synergies.”

“This strategic transaction with EQT is the culmination of an exhaustive process conducted by the ETRN board to determine the best strategic path forward for our shareholders, employees, and stakeholders,” said Thomas F. Karam, executive chairman of Equitrans Midstream. “Combining with EQT creates a premier vertically integrated natural gas business that is a game changer for the natural gas industry and Appalachian Basin. The transaction delivers full and fair value to ETRN shareholders and provides the opportunity to participate in future value growth as EQT executes on its strategy. We are proud of our employees who have worked hard to build one of the leading midstream companies in the Appalachian Basin. And we are excited for the future with EQT.”

News: EQT to Buy Mountain Valley Pipeline Owner for $5.5 Billion

Viavi to acquire Spirent Communications for $1.28bn

BY Richard Summerfield

US technology specialist Viavi Solutions has agreed to acquire the UK telecoms testing group Spirent Communications for $1.28bn.

Under the terms of the deal, Spirent shareholders will receive175 pence per share, which includes a special dividend of 2.5 pence per Spirent share in place of any final dividend for the year ended 31 December 2023. The price represents a premium of about 61.4 percent to Spirent’s closing price on 4 March, the last day of trading before the deal was announced.

The deal is expected to close during the second half of 2024, subject to shareholder approvals and other customary closing conditions, including Spirent shareholder approval and certain regulatory closing approvals. Those Spirent directors who hold shares in the company have signed irrevocable agreements in support of the deal.

The transaction will be funded by Viavi’s existing cash, an $800m loan from Wells Fargo and a $400m investment in Viavi by US private equity group Silver Lake. The acquisition will boost Viavi’s artificial intelligence, 5G and cloud-native innovation. According to a statement announcing the deal, operational efficiencies are anticipated to result in annual run-rate cost synergies of up to $75m two years after completion of the transaction.

“The Spirent Board intends to unanimously recommend this all-cash offer, which not only represents an attractive outcome for Spirent Shareholders, but also provides a significant opportunity for employees, customers and other stakeholders through what is a highly strategic and highly complementary combination,” said Sir Bill Thomas, chairman of Spirent. “With its strong management team, global scale and the cultural alignment between our businesses, we are confident that in VIAVI, we have found the right owner to take Spirent on to the next phase of its growth story.”

“Combining with VIAVI brings together a highly complementary product offering which can be marketed globally,” said Eric Updyke, chief executive of Spirent. “It will enable Spirent to build on the strategic progress we have made to date, with a partner that has the scale and resources to capitalize on the long-term growth opportunities ahead. The combination of VIAVI and Spirent creates a stronger business that will be better able to compete, and we are confident in the opportunities this will bring for our stakeholders.”

“Combining our leading communications test and measurement and optical technologies and Spirent’s high-performance testing and assurance solutions is expected to deliver enhanced product solutions and applications, accelerate growth in new markets and strengthen innovation through expanded engineering and design capabilities,” said Oleg Khaykin, president and chief executive of VIAVI. “Further, we are uniting two teams with a shared passion for developing compelling and cutting-edge offerings for customers and a commitment to technological excellence. We are pleased to welcome a strategic, long-term investment from Silver Lake in connection with the Acquisition. Silver Lake has an outstanding track record of supporting leading technology companies through both organic growth investments and scale acquisitions.”

News: US-based Viavi to buy UK's Spirent Communications for $1.28 bln

IGT and Everi combine in $6.2bn gaming deal

BY Fraser Tennant

In a combination that creates a global gaming and FinTech enterprise, International Game Technology (IGT) and Everi Holdings Inc. are to merge in a deal that values the combined businesses at approximately $6.2bn.

Under the terms of the agreement, the transaction will be executed through a series of steps pursuant to which IGT will spin off a subsidiary owning its Global Gaming and PlayDigital businesses to IGT shareholders.

That entity will then combine with Everi, with IGT shareholders receiving shares of Everi common stock and Everi continuing as the parent company. IGT shareholders will receive approximately 103.4 million Everi shares, resulting in an approximate 54 percent ownership interest in the combined company, with existing Everi stockholders owning the balance.

Following the closing of the transaction, Everi will change its name to International Game Technology, Inc. and will trade on the New York Stock Exchange under the ticker IGT.

“We are bringing together two businesses with complementary strengths that are stronger and more valuable together,” said Vince Sadusky, chief executive of IGT. “The combination results in a comprehensive and diverse product offering, addressing more aspects of the gaming ecosystem across land-based gaming, iGaming, sports betting and FinTech.”

The transaction has been approved unanimously by all voting members of the IGT board of directors and the Everi board of directors. 

“We expect the combined company will deliver a comprehensive range of products and services that will engage gaming patrons and drive efficiencies and revenues to our customers,” said Michael Rumbolz, executive chairman of Everi.

Subject to receipt of regulatory approvals, the approval of Everi stockholders and IGT shareholders, and satisfaction of other customary closing conditions, the transaction is expected to close in late 2024 or early 2025.

Mr Sadusky concluded: “The creation of separate gaming and lottery companies, each with experienced management teams and simplified business models, better positions each company to service customers and create significant value for stakeholders.“

News: International Game Technology to split lottery business from gaming unit

CenterPoint to sell natural gas assets in $1.2bn deal

BY Richard Summerfield

Bernhard Capital Partners has announced it is to acquire CenterPoint Energy’s Louisiana and Mississippi natural gas assets for $1.2bn.

Under the terms of the deal, Bernhard Capital’s portfolio company Delta Utilities will acquire CenterPoint Energy’s Louisiana and Mississippi natural gas local distribution businesses which include around 12,000 miles of main pipeline in Louisiana and Mississippi serving approximately 380,000 metered customers. The assets represent less than 4 percent of CenterPoint’s overall rate base.

According to a statement announcing the deal, the sales price of $1.2bn represents approximately 32 multiples of the assets’ 2023 earnings. The transaction is anticipated to close toward the end of first quarter of 2025, subject to customary closing conditions, including antitrust clearance and state regulatory approvals.

“The transaction will allow us to optimize our portfolio of utility operations and efficiently recycle approximately $1 billion in after-tax cash proceeds into our service territory where we have both electric and natural gas operations or where we have a larger presence at a valuation that is more efficient than issuing common equity,” said Jason Wells, president and chief executive of CenterPoint. “The sale will also enable us to redeploy approximately $1 billion of future capital expenditures intended for Louisiana and Mississippi into jurisdictions with less regulatory lag thereby enhancing the ongoing earnings power of the company.

“This will mark the fourth time over the past few years in which we have recycled sales proceeds and reinvested them in our regulated businesses for the benefit of all stakeholders,” he continued. “The transaction, along with the reinvested capital, will not change our targeted non-GAAP EPS growth rate of 8% in 2024, and the mid-to-high end of 6%-8% annually from 2025 through 2030. The efficiency of this transaction and portfolio optimization will further enhance our ability to continue executing our industry-leading long-term growth strategy for years to come.”

“This transaction will bring together deep expertise and leadership with many years of experience in utility operations and the invaluable institutional knowledge of those who have operated these systems for decades to benefit customers,” said Jeff Jenkins, founder and partner at Bernhard Capital Partners. “It builds upon our recent announcement to acquire Entergy’s New Orleans and Baton Rouge natural gas distribution businesses, establishing stronger, more resilient communities across the Gulf South. Once both transactions are complete, Delta Utilities will be a leading natural gas utility in Louisiana and Mississippi and among the top 40 providers in the United States.”

News: CenterPoint to sell Louisiana and Mississippi natgas assets for $1.2 bln