Blackstone Group, the US private equity house which closed one of the largest private equity funds last year on $6.5bn, is thought to be preparing an offer for Italian directories business Seat Pagine Gialle (SPG), put up for sale by Telecom Italia.
Telecom Italia, which earlier this month announced plans to merge with fellow Italian telecoms business Olivetti, is planning to sell its 54 per cent stake in the directories unit as part of plans to trim its debt pile by about E4.5bn, according to a report on Reuters. Other firms with a possible interest in SPG include BC Partners and Investitori Associati.
Seat Pagine Gialle last year reported a steady increase in its performance. It reported turnover of E1.99bn in 2002, comparable with the 2001 numbers (E1.96bn), although EBIT was up by over E200m at E232m. On the back of the results, Dresdner Kleinwort Wasserstein recently set a target price of E0.76 per share, compared with its current E0.60 share price.
Directory businesses have been popular with financial buyers, both in Europe and the US, as telecom companies seek to streamline their operations and alleviate multi-billion Euro debt piles. The first private equity deal in the sector was led by Apax Partners and Hicks Muse Tate & Furst in early 2001, when the two firms acquired British Telecom’s Yell directories business for £2.14bn.
Subsequent deals have included Texas Pacific, which acquired Telenor Media (Norway) for E722m; Carlyle Group and Welsh Carson Anderson & Stowe’s $7bn acquisition of the directories business of Qwest Communications in the US; and most recently 3i and Veronis Suhler Stevenson’s acquisition of TeleMedia, the directories unit of Dutch telecommunications company Royal KPN for E500m.
Industry professionals in Italy believe that there will be an increase in buyout activity in the Italian market this year. “The Italian market is likely to be better than 2002, although not dramatically so,” says Fabio Sattin, founding partner at Private Equity Partners, based in Milan. “The most active area of the market will be the buyout sector.”
A number of transactions are on the boil. Carlyle Group is thought close to agreeing a E1.6bn deal to acquire Fiat Avio from the Italian carmaker. The Italian government had originally expressed concern at the unit being sold to an overseas bidder, but an agreement between Carlyle and state-owned defence and engineering firm Finmeccanica looks to have assuaged government objections.
Italian agricultural equipment manufacturer Castelgarden is also likely to be the subject of private equity interest. Earlier this month, New York-based distressed investment specialist Cerberus Capital Management acquired Fila Holding, an Italian manufacturer of footwear and apparel for sport and leisurewear, from Holding di Partecipazioni Industriali in a $351m transaction.