Italy’s OTTO Mega-Deal Set for Completion

The privatisation of SEAT, the Italian “Yellow Pages” business, the largest private equity transaction yet seen in Continental Europe (EVCJ August/September 1997, page 4), will be finalised this Spring.

Late last year, an international equity syndicate co-led by Banca Commerciale Italiana (BCI) and Investitori Associati, invested around L875 billion (ecu 450 million) to acquire the Italian Treasury’s holding in the business, which is expected to post profits of L435 billion on 1997 sales of L1,700 billion. The Treasury owned 62% of the ordinary shares and 1% of the preferred shares, representing 50% of SEAT’s total capital. The consortium will acquire the balance of the target’s stock in the public market through an offer scheduled for launch this March.

A final price for the company, now known as OTTO, will not emerge until the price adjustment process for the offer is concluded. However, total funding for the deal will be close to L4000 billion (ecu 2.05 billion) including bridge finance and working capital.

In addition to BCI and Investitori Associati, who are subscribing for respective equity stakes of 15% and 10%, the consortium includes Telecom Italia (20%), Bain Capital (15%) De Agostini (13%) BC Partners (10%), CVC Capital Partners (c. 7%), ABN AMRO (c. 5% and Sofipa (c. 3%).

ABN AMRO, Banca Commerciale Italiana, Paribas and Citibank arranged a senior debt package totalling L2,600 billion, which is now virtually fully syndicated. Deutsche Morgan Grenfell has underwritten a L500 billion mezzanine tranche that the consortium plans to refinance with a high-yield lira issue later this year.