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TPG Withdraws Alitalia Bid, Two Buyers Left

A consortium led by U.S. private equity company TPG has withdrawn from a bid for Alitalia, leaving just two possible buyers for the Italian state's controlling stake in the loss-making airline.

"Having examined the rules of procedure for the binding offer phase of the Alitalia sale, (the consortium) believes it is not able to respect all the points set out," it said in a statement.

TPG recently announced it was bidding for another European flag carrier, Spain's Iberia. Sources familiar with the matter told Reuters in late March that if TPG were to buy one of the two airlines, it would withdraw from talks on the other.

TPG, also known as Texas Pacific Group, was bidding for Alitalia in a consortium with fellow private equity group MatlinPatterson and Italian merchant bank Mediobanca.

The group's withdrawal leaves Italian airline Air One and Russian flag carrier Aeroflot in a head-to-head contest for control of Alitalia. Both bids are supported by Italian banks, Aeroflot's by UniCredit, and Air One's by Intesa Sanpaolo.

Ahead of the announcement, Alitalia shares closed up 0.11% at 0.8565 euros, according to bourse data, but fell in after-hours trading, down as much as 2% at one point.

The Italian state, which shortlisted only three final bidders, has said binding offers must be submitted by July 2.

It is selling at least a 39.9% stake from the 49.9% it holds, and is willing to sell the entire shareholding if the bidder wants it.

Aeroflot said last week it was concerned Alitalia's finances might be worse than they appeared, even after the Italian carrier wrote down the value of its fleet by 197 million euros ($265.7 million).

Alitalia's 2006 net loss, including the fleet writedown, was 626 million euros, 458 million euros larger than in 2005. Its net debt on Dec. 31 was 993 million euros, up 238 million euros from a year earlier.

Infrastructure Minister Antonio Di Pietro has said a capital increase is unavoidable for the airline, given the amount of debt. Alitalia shareholders will meet in June to discuss a capital increase.

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