Hutchison Whampoa and VimpelCom are close to reaching an agreement on a proposed merger of their respective Italian units, Reuters reported.
Unnamed sources have told Reuters that an announcement could come as early as this week. "Negotiations have become serious," the sources said.
Hutchison Whampoa and VimpelCom confirmed in May that they are in exploratory talks to merge the two units, marking the latest effort by the Hong Kong-based company to expand its European operations.
A successful outcome of the talks would unite Three Italy with VimpelCom's subsidiary Wind, bringing together the market's third and fourth-largest players. The transaction would therefore reduce the number of mobile network operators from four to three, following similar moves in Germany, Ireland and Austria.
In May, Reuters noted that Wind's debt remains an issue, and has been an obstacle to a full takeover by Hutchison Whampoa in the past.
Wind now has total net debt of €8.9 billion ($9.74 billion), which is down from the €9.65 billion reported at the end of last year. Efforts to improve the situation have included the sale of over 7,000 mobile masts to Abertis for €693 million.
Hutchison has long been interested in shoring up its Three Italy unit and the talks with VimpelCom had been much anticipated.
Indeed, Hutchison has been one of the drivers of a consolidation trend sweeping Europe as mobile operators scale up in the face of fierce competition. The Hong Kong-based company is also in the process of buying O2 UK from Telefónica, and only recently completed the acquisition of O2 Ireland from the Spanish group. It also previously acquired Orange Austria.
A banker close to Hutchison told Reuters that the Hong Kong-based group "is effectively in acquisition mode". He added that Hutchison would seek to retain control of any merged entity by securing the majority of its voting rights.
For more:
- see this Reuters article
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