Blackstone offers €8bn for stake in Wind

The global buyout group has tabled an offer for a 63 percent interest in Italian telecommunications group Wind, valuing the business at €12.6 billion in what would be the largest ever European private equity deal.

New York-headquartered alternative asset giant The Blackstone Group has tabled an offer to buy a 63 percent stake in Wind-Infostrada SpA, the telecommunications arm of Italian power company Enel. The bid values the company at more than €12.6 billion ($16.4 billion), according to a report published yesterday in Italian newspaper Milano Finanza.

If the deal goes ahead, the transaction would be the largest European leveraged buyout ever and second only globally to KKR’s $31.3 billion acquisition of RJR Nabisco in 1989.

Blackstone’s initiative is run out of the firm’s London office, where Larry Guffey is in charge of a team specialising in media and telecoms deals in Europe. 

A bid this large would likely require an equity contribution of approximately €2 billion. A source familiar with Blackstone said the firm could provide up to €750 million on its own if it drew on both Blackstone Capital Partners IV, the $6.45 billion global LBO fund raised in 2002, and Blackstone Communications Partners I, a $2 billion sector fund. The balance would be syndicated to other sponsors.

Blackstone declined to comment.

Enel has been considering a number of options for disposing of Wind, including a possible IPO, for some time. It also invited a number of private equity groups to consider bids for the telecommunications unit.

According to the Financial Times, Enel last year rejected a €12 billion bid from a consortium comprising New York financier Wilbur Ross, French private equity specialist Philippe Nguyen and the Egyptian-based Sawiri family, which runs the Orascom telecoms group at the end of 2004.

Wind is the third largest mobile phone operator in Italy with an 18.5 percent market share behind market leader Telecom Italia and Vodafone.

The deal would be a major step up from the large LBOs that took advantage of the widespread availability of debt in the lending market in 2004.

In November, a consortium comprising New York-headquartered Clayton Dubilier & Rice, French independent investment company Eurazeo and the global private equity arm of investment bank Merrill Lynch, teamed up to acquire Rexel, a global distributor of electrical equipment for €3.7 billion.

In January 2005, BC Partners and Cinven, the London-based private equity firms, entered into an exclusive agreement to acquire Amadeus Global Travel Distribution (Amadeus) of Spain for €4.3 billion ($5.7 billion).

The proposed transaction comes prior to Blackstone re-entering the fundraising market in 2005. The firm plans to raise a successor fund to the $6.45 billion vehicle it raised in 2002. Market practitioners believe Blackstone could raise in excess of $10 billion for the new fund.