Under the deal, Enel and existing Metroweb shareholder, the state lender Cassa Depositi e Prestiti (CDP) Equity (CDPE), will each hold a 50 percent stake in the combined EOF/Metroweb entity.
Enel and CDPE will each participate in a EUR 714 million capital increase for EOF which will use the proceeds to acquire all shares in Metroweb, Enel said in a statement.
The deal assumes an enterprise value including minority shareholdings of EUR 814 million for Metroweb, whose other major shareholder F2i will be offered an option to buy a stake of up to 30 percent of the combined EOF/Metroweb entity.
F2i must exercise the option, based on the amount paid by EOF to purchase Metroweb, by 15 October and if it agrees to do so, Enel and CDPE will contribute their equal stakes in the new EOF to a newly formed company over which they will retain control.
Enel said the merger, expected to close by the end of November, will enable EOF to broaden the scope of its existing cabling operations, notably by inheriting Metroweb's existing infrastructure in Milan and the cable it is laying in Bologna and Turin and thanks to the improved financing opportunities of the combined group.
As a result of the agreement, EOF is raising the number of Italian cities it plans to cable from 224 to 250, in line with the partnership agreed in a letter of intent signed in March with Vodafone and Wind.
EOF’s updated 2016-2030 strategic plan also provides for: coverage with very-high-speed fibre of around 9.5 million homes (compared with 7.5 million homes in the previous plan) in the period from 2016 to 2021; a progressive increase in investment aimed at developing the network from around 2.5 billion euros to around 3.7 billion euros, of which about 85 percent in 2016-2021; generating in 2021, EBITDA of about 300 million euros and an EBITDA margin of around 75%.
Completion of the cabling of the first 10 cities under the strategic plan – Bari, Cagliari, Catania, Florence, Genoa, Naples, Padua, Palermo, Perugia and Venice – is expected to begin in the second quarter of 2017 with completion scheduled for the first quarter of 2019.
Telecom Italia, which has its own EUR 3.6 billion plan to build a national fibre network in Italy, reportedly offered EUR 820 million to acquire Metroweb in May.
TIM agreed this week a fibre deal with Metroweb's other, minor, shareholder, Swiss-based Fastweb, which decided to dispose of its stake, preferring to work with the largest Italian operator rather than Enel, a utility, which does not plan to provide services over the network it is building.
Fastweb CEO Alberto Calcagno earlier told Corriere della Sera that Fastweb's interests were not aligned with Enel, as Fastweb is a vertically integrated operator, developing both a network and services. As a result it decided not to exercise its veto on the Enel-Metroweb deal. Calcagno said that Fastweb does not rule out using the Enel network in future in areas where it does not have its own infrastructure.
