Rai Way slips after the cancelled merger with Ei Towers

(Il Sole 24 Ore Radiocor) - The towers of Rai Way shares are slipping on the Milan Stock Exchange following the collapse of the merger with Ei Towers. Rai – the company’s main shareholder with a 65 per cent stake – has announced that the deadline for the merger between Rai Way and Ei Towers has expired without the parties managing to identify a ‘shared basis for negotiation suitable for allowing the transaction to proceed’. The memorandum of understanding had been signed with the shareholders of Ei Towers (holding 60 per cent of the share capital), namely F2i and Mfe – MediaForEurope (holding 40%), which is also seeing its share price fall on the stock market due to the failure to finalise the agreement (Mfe A and Mfe B ). The purpose of the agreement – which had already been extended three times since negotiations began in December 2024 – was to carry out preliminary analyses regarding a possible merger between the two companies, to create a national broadcaster infrastructure group.

‘During the period in which the memorandum was in force, the parties – as stated in the press release – carried out in-depth analysis and discussions on the key industrial, corporate, financial, regulatory and governance aspects of the proposed transaction.’ However, as “a result of the discussions that took place,” the statement continues, “the assessments carried out did not enable the parties to identify a shared basis for negotiation suitable for the transaction to proceed.” Rai concludes by reaffirming its commitment to “pursuing industrial options characterised by soundness, long-term sustainability and value creation in accordance with its public service mission and the interests of all shareholders”.

The main outstanding issues, according to Intermonte’s analysts, concerned the merger terms and the alignment of service contracts. According to Radiocor, a last-minute proposal from F2i and Mfe is said to have been put forward at the eleventh hour to prevent the negotiations from breaking down and to resolve some of the outstanding issues. First and foremost among these was the extension to 2047 of the service contracts between the tower group and the broadcasters, representing a twenty-year commitment, whilst an adjustment to the exchange ratio was requested, with the key condition being that Rai would hold an absolute majority in the new entity, as well as operational governance. This proposal too was reportedly rejected by Rai. According to *Il Sole 24 Ore*, further guidance could come from the broadcaster’s board of directors, which is due to meet on Wednesday 1 July. A resumption of negotiations is considered highly unlikely, both by the press and by analysts, but cannot be ruled out entirely. Furthermore, according to *Il Sole*, Viale Mazzini may now be considering the option of selling the stake in RaiWay exceeding 50.1 per cent (the threshold that would allow it to retain control) in order to finance its business plan.

Looking instead at the current situation, the collapse of the deal is “particularly negative for Ei Towers’ shareholders, especially for F2i, which has invested in the asset since 2018 and has long been aiming to maximise its return on investment and exit the investment”, explains Intermonte, which also points the finger at Mfe, “for whom the 40 per cent stake has not been considered strategic for years now”. As for Rai Way, however, according to the experts, the breakdown of the negotiations was “largely factored into the share price’s performance”. There is therefore scope to “reconsider an independent scenario, with increased investment in diversification to serve both Rai and other potential clients”. On the other hand, Intermonte explains, the deal would have entailed “an increase in debt without tangible financial benefits” and “would have doubled its exposure to DTT (digital terrestrial television), a technology set to become rapidly obsolete in the coming years”. In light of all this, analysts are maintaining a target price of €7.70 with a ‘Buy’ recommendation. The same applies to Banca Akros, which also recommends a ‘Buy’ on the share with a target price of €7.10.