July 15, 2016 / 8:05 PM / 3 years ago

Cairo scores surprise victory in battle for Italian publisher RCS

MILAN (Reuters) - Italian media tycoon Urbano Cairo secured 49 percent of influential publisher RCS Mediagroup (RCSM.MI) after his takeover bid on Friday unexpectedly leapt ahead of a rival offer by some RCS investors and private equity firm Investindustrial.

The battle over the publisher of Corriere della Sera, the country’s top-selling mainstream newspaper, has pitted most of Italy’s corporate establishment against Cairo, who made his fortune with magazines and now owns television channel La7.

Provisional data from Italy’s stock exchange showed that take-up of Cairo’s offer, which stood at just 22 percent of RCS capital on Thursday, more than doubled on the last day in which investors could tender their shares.

The bid by the rival consortium, which congratulated Cairo on his victory, reached 38 percent of capital.

In an effort to stop Cairo from winning RCS, a group of long-standing shareholders in May teamed up with Investindustrial, the private equity fund of Andrea Bonomi, scion of a prominent Milanese industrial family.

The group comprised Mediobanca (MDBI.MI), the merchant bank historically at the heart of Italy’s relationship capitalism, tyre maker Pirelli, insurer Unipol (UNPI.MI) and Diego Della Valle, founder of luxury goods group Tod’s (TOD.MI).

Media ownership remains a powerful tool in Italy where newspapers still shape the debate in politics and business, despite a broader decline in public readership.

Corriere could have an important role to play as Italy approaches an October referendum on Prime Minister Matteo Renzi’s constitutional reform which could destabilise the government.

A protege of former prime minister and media magnate Silvio Berlusconi, Cairo has relaunched La7 since he bought it three years ago. He has pledged to cut costs also at RCS and boost revenues.

The rival consortium owns a 25 percent stake in RCS and its lawyers have argued it should be allowed to keep the shares investors have tendered even if its bid lost out.

Market regulator Consob is yet to rule over the matter.

If allowed to keep their stake at 38 percent, Investindustrial and the group of RCS investors could hamper Cairo’s plans as they would be able to oppose extraordinary operations such as a merger between RCS and Cairo Communication.

Both offers were repeatedly sweetened along the way, driving up shares in RCS which closed on Friday at 0.94 euros compared with 0.46 euros in early April when Cairo first launched an all-share bid with the support of Intesa Sanpaolo (ISP.MI).

Cairo Communication said it had bought a 4 percent of RCS, paying 1 euros a share on Friday, after its rivals bought a 2.2 percent stake earlier this week.

Cairo’s final offer was of 0.18 shares in Cairo Communication as well as 0.25 euros in cash for each RCS share. The rival bid offered 1 euros a share.

RCS is under restructuring after losing 1.3 billion euros over the past five years and running up 500 million euros in debt due to an ill-fated investment in Spain.

The current tussle was triggered by a decision by car maker Fiat Chrysler (FCHA.MI) to sell its 16.7 percent stake in RCS.

The stock exchange will publish the final data for the two bids, which are not expected to differ much from the provisional ones, before markets open on Monday.

Reporting by Valentina Za and Claudia Cristoferi; Editing by Mark Potter

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