Private Equity News & Analysis

TPG to compete with ten other bidders for Alitalia

Eleven different groups have expressed an interest in bidding for struggling airline Alitalia, according to the Italian government, including Texas Pacific Group and Terra Firma.

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Texas Pacific Group is facing stiff competition in its bid to buy Alitalia, after ten other groups also expressed an interest in bidding for the ailing Italian airline.

The Italian government, which owns 49.9 percent of Alitalia, said in a statement that eleven groups had submitted “manifestations of interest” to buy a stake of at least 30.1 percent in Alitalia, ahead of next Monday’s deadline. Under Italian law, this would force the winning bidder to make an offer for the whole carrier.

In addition to TPG, Air One, another Italian airline, and a group led by Italian businessman Paolo Alazraki are also set to submit bids. The other potential bidders include UK buyout firm Terra Firma; Management & Capitali, an investment vehicle of Italian financier Carlo De Benedetti who specialises in turnarounds; US-based distressed investor MatlinPatterson, Benstar-Saturn Enterprises, Net Present Value, and Porcellana Castello. Unicredit Banca Mobiliare, the Italian investment bank, may also bid.

Fabio Scaccia, an Italian professor who has submitted a bid as “provocation”, has already been discounted by the government on the grounds that his sole financial means is a monthly salary of €1,230.

The list does not include Air France-KLM, Europe’s biggest airline and reportedly the favourite to land Alitalia. The Paris-based carrier, which already owns about 2 percent of the Italian group, said it had not expressed an interest because Alitalia had failed to meet some unspecified conditions. However, it may yet join the bidding at a later stage.

The Italian treasury, which is being advised by Merrill Lynch, will now spend the next few days deciding who will go through to the next phase of bidding. Any new entrants will only be able to bid in conjunction with one of the 11 groups named.

The Italian government said in December it was planning to sell Alitalia after turnaround efforts proved unsuccessful. The government said at the weekend that the airline recorded an estimated loss of about €380 million last year, underlining the size of the task facing the winning bidder.

TPG is also part of a consortium trying to buy Qantas, the Australian airline.