Analyst Note
| Javier Correonero |Iliad announced the acquisition of cable operator UPC Poland from Liberty Global for a PLN 7.00 billion enterprise value (EUR 1.54 billion at 22 Sept. exchange rates). It was no secret that Iliad wanted to become a converged player in the Polish market after acquiring mobile operator Play in 2020, and the offer it made for UPC in July 2021 has finally been accepted. The acquisition price implies an EV/EBITDA (after leases) multiple of 9.3 times before synergies, which in our opinion is slightly high, but the total amount of synergies Iliad can realize will be key to determining the final price paid. The company estimates it can achieve EUR 30 million in run-rate cost synergies coming from personnel and IT, and EUR 10 million-30 million in revenue synergies, mainly coming from cross-selling mobile and fixed services. Although we give higher credibility to the cost synergies, we have more doubts over revenue synergies and estimate Iliad would have to realize at least EUR 15 million in run-rate revenue synergies to justify the price paid. We maintain our EUR 182 fair value estimate and no moat rating for Iliad.