Hutchison, VimpelCom Said to Agree on CEO in Italy Merger Talks

Updated on
Maximo Ibarra

Maximo Ibarra

Source: Wind Telecomunicazioni SpA via Bloomberg

Hutchison Whampoa Ltd. and VimpelCom Ltd. reached a consensus on senior management positions in a bid to strike an agreement to merge their Italian wireless businesses, according to people familiar with the matter.

The companies are backing Maximo Ibarra, the 46-year-old chief executive officer of VimpelCom’s Wind Telecomunicazioni unit, as CEO of the enlarged entity, said the people, who asked not to be identified because the talks are private. Vincenzo Novari, who leads Hutchison’s 3 Italia division, is poised to become a board member and take a supervisory role for tycoon Li Ka-shing’s businesses in Italy, one of the people said.

VimpelCom shares jumped as much as 10 percent in New York. Telecom Italia SpA, Italy’s largest carrier, closed 3.3 percent higher in Milan. Italy is the last major European telecommunications market that hasn’t seen consolidation. A combination of Wind and 3 Italia would reduce the number of wireless networks in the nation to three from four, following similar moves in Germany, Ireland and Austria.

Negotiations between Hong Kong-based Hutchison and Amsterdam-based VimpelCom now focus on the structure of the venture, which would have more than 30 million customers and about 6.4 billion euros ($7.2 billion) in 2014 revenue, the people said. A key issue that needs to be resolved is the shareholding structure of the new entity, one of the people said, adding that the companies are projecting an agreement over the next three months.

Shares Jump

No final decision on management and financial details of a deal have been made and a transaction could still fall apart, they said. Artem Minaev, a VimpelCom spokesman, declined to comment, as did Hans Leung, a spokesman for Hutchison.

VimpelCom traded 7.4 percent higher at $5.66 at 1:07 p.m. in New York. Hutchison closed 0.2 percent lower at HK$110.60 in Hong Kong earlier Tuesday. Telecom Italia closed at 1.08 euros in Milan, after rising about 5 percent intraday on the news.

“The first beneficiary of consolidation among carriers is Telecom Italia since a merger of Wind and Tre may lead to a simplification of the market,” said Fabio Troiani, managing director at consulting firm Business Integration Partners, which covers the telecommunications industry. A deal would probably take a year to be cleared by regulators, Troiani said.

A merger of the assets would create Italy’s largest mobile-phone carrier by customers. Earlier this year, Hutchison agreed to acquire Telefonica SA’s O2 unit for 10.25 billion-pound ($16 billion) to create Britain’s biggest wireless provider, marking a milestone in Li’s efforts to remake the Hong Kong conglomerate.

In Italy, Hutchison also manages container ships at the port of Taranto in the south, and operates a chain of about 130 Marionnaud Parfumeries SA stores.

VimpelCom’s largest shareholders include Russian billionaire Mikhail Fridman and Telenor ASA of Norway.

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