Iliad founder offers €3.1B to set his baby Free (of other shareholders)

Iliad founder Xavier Niel: Picture by @Romuald Meigneux

Iliad founder Xavier Niel: Picture by @Romuald Meigneux

  • Iliad founder Xavier Niel wants to buy out other shareholders and delist the company best known for its Free brand in France
  • He is offering €182 for each share he doesn’t already control, a 61% premium over 29 July closing price
  • Niel already controls 70.6% of the stock and has support from others
  • He says taking the company private will enable accelerated transformation and major investments

Iliad founder Xavier Niel stunned the financial and telecoms markets on Friday morning with a move to buy out the other shareholders in European network operator Iliad: If successful, the deal to take full control of Iliad, which has 40 million customers across France, Italy and Poland, will cost him €3.1 billion.

Niel, who founded the competitive operator in France in 1999, already controls (either directly or indirectly) 70.6% of Iliad’s stock and, with the support of Iliad executives and other shareholders, already has backing for his move that represents 74.9% of the total shares. 

He is offering €182 for each share he doesn’t already control, a staggering 61% premium over the share price recorded at the end of trading on Thursday 29 July: Not surprisingly, Iliad’s share price jumped by 61% to €182 on the Paris stock exchange this morning. It’s worth noting, though, that Iliad’s share price started the year at €172.85, but has been on the slide (on and off) since then, particularly in the past couple of months.

Niel believes the company’s “ambitious” strategy can be best executed if Iliad is a private company, a sentiment that mirrors that of Patrick Drahi, who took another European service provider, Altice Europe, private through a similar move earlier this year

Niel stated: “I founded iliad in 1999 and I’m very proud of what the Group has grown into and the value it has created for all of its shareholders. Iliad is now entering a new phase in its development, requiring rapid changes and major investments which will be easier to undertake as an unlisted company. Our ambition for iliad is to accelerate its growth to make it a leading telecommunications player in Europe.”

Iliad CEO Thomas Reynaud added: “Iliad’s management team welcomes this further demonstration of Xavier Niel’s commitment to the Group. This operation will secure iliad’s strategic independence and help us pursue our business development plan based on major investments in 5G and fiber. It’s a question of growth, trust and confidence. I’m very excited at the idea of starting a major new chapter in iliad’s history, with the full support of Xavier Niel and the Group’s 15,000 employees.”

Iliad is already a significant player in Europe and a thorn in the side of its rivals in France and Italy in particular. In France it has 13.35 million and 6.8 million fixed broadband customers, in Italy it has 7.8 million mobile customers, and in Poland (where Iliad acquired Play last year) it has 12.3 million active mobile and about 200,000 ‘home’ (TV or broadband) customers.

For the first half of this year, group revenues totalled €3.72 billion while profits came in at €239 million. Full and finalized results are due to be reported on 5 August, but the accompany news of Niel’s offer the company provided a very details update on its financials today in this document.

Iliad has a history of shaking up markets with customer-friendly, low-cost fixed broadband and mobile service offers: It transformed the French market, first with its broadband services that used its in-house designed network technology and then again (and more dramatically) once it entered the mobile market; and incumbent operators in Italy are still suffering from market share and revenue losses as a result of Iliad's launch there in 2018.

With Niel talking about becoming a "leading telecommunications player in Europe" with a focus on 5G and fibre-based broadband, the region's pan-European operators such as Deutsche Telekom, Vodafoe, Telefónica and Orange (which of course has already felt the impact of Free services in France), must be wondering what the European telecoms maverick has planned for the coming decade. 

- Ray Le Maistre, Editorial Director, TelecomTV

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