U.S. News

Aeroflot Joins Unicredit in its Bid for Alitalia as Bidders Narrow to Three


Unicredit has recruited Russian airline Aeroflot as a partner in the bank's bid to take over struggling Italian airline Alitalia, a bank executive said Monday as the number of bidders narrowed to three.

Italy's Finance Ministry issued a statement saying that the U.S. asset management group Matlin Patterson Global Advisers LLC and Texas Pacific Group were pooling their bid and teaming up with the Italian investment bank Mediobanca.

The third remaining bidder was AP Holding SpA, led by Air One chairman Carlo Toto, as Monday's deadline lapsed for new bidders to enter the field.

Investors cheered the formation of the group of bidders, and Alitalia shares closed up 5.6% at 0.99 euros ($1.30) on the Milan stock exchange. Shares had been suspended earlier in the day pending the final bidders' list. Preliminary nonbinding offers are due by April 16.

Under terms of Unicredit's deal with Aeroflot, the Russian airline would be the majority partner in the final offer with a 95% stake to Unicredit's 5%, said Sergio Ermottoi, Unicredit's head of investment banking.

In Moscow, Aeroflot deputy general director Lev Koshlyakov confirmed the company's participation, but declined to comment further on the bid.

"We have made an expression of interest and sent our request to the Italian Ministry of Finance," Koshlyakov told the Associated Press.

Five bidders had entered the last phase of bidding, but Italian private equity fund Management & Capitali SpA stepped out of the process last Friday, without providing reasons.

The Italian government, which controls a 49.9% share of Alitalia, intends to sell at least a 39.9% share to a buyer with a turnaround plan. Under the latest terms outlined by the government, bidders must guarantee Alitalia will retain an Italian identity for at least eight years and set out terms of a business plan to turn around the airline.

The government wants to complete the privatization by the end of June.

The ailing flagship Italian airline, which reported widening pretax losses in 2006 at 405 million euros (nearly $540 million), has been battered by high fuel costs, low-cost competition and strikes. A 24-hour walkout planned for April 18 was announced Monday. The strike of all Alitalia personnel was called amid a contract dispute, union officials said.