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Italy picks Certares-led bid for exclusive ITA Airways talks

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MILAN — Italy has picked a group led by U.S. private equity fund Certares, backed by Air France-KLM and Delta Air Lines Inc, for exclusive talks on buying a majority stake in ITA Airways, the Treasury said on Wednesday.

The offer, details of which were not made public, would leave the Treasury with “at least” a 40% stake in ITA and the right to appoint the company’s chairman and exercise a veto on certain “strategic choices,” a source told Reuters.

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Certares, which has its European headquarters in Milan, is offering around 600 million euros ($599 million) for a stake of about 60% in the successor to Alitalia, sources have previously told Reuters.

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It was not immediately clear whether the two airlines planned to take equity stakes or act as commercial partners, helping to broaden ITA’s reach. There was no immediate comment from Air France or Delta.

The consortium beat a rival bid presented by shipping group MSC and Germany’s Lufthansa, which another source said was offering between 850 and 900 million euros for a larger 80% stake.

“We take note of the decision. We are still convinced our offer with MSC is the better solution,” a Lufthansa spokesperson said, adding Italy had chosen the option that retained greater state influence. MSC declined to comment.

“This is surprising because MSC-Lufthansa was previously considered the preferred bidder,” said Johannes Braun from Stifel Research.

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“From an investor perspective, it’s a relief,” he added, noting concerns over predecessor Alitalia’s history of running up losses.

Prime Minister Mario Draghi’s government wants to sign a preliminary agreement with the preferred bidder by Sept. 10.

However, any deal would probably close in the final quarter of the year by which time Italy should have a new government after a national election on Sept. 25, potentially complicating the issue further.

The Brothers of Italy party, which is topping the polls, has called for the next administration to make a decision on ITA. ($1 = 1.0013 euros) (Additional reporting by Ilona Wissenbach in Frankfurt editing by Agnieszka Flak and Keith Weir)

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