Stock Groups

KKR makes a non-binding $12 billion takeover bid for Telecom Italia


On the New York Stock Exchange’s floor, August 23, 2018, a KKR logo was displayed.

Brendan McDermid | Reuters

Telecom Italia, (TIM), said that its board reviewed a proposal from the U.S. Fund on Sunday. KKRIt was designed to take Italy’s largest phone company private. The group had a value of 10.8 billion euro ($12 billion).

KKR proposes a 45.7% discount to Friday’s closing price for TIM’s ordinary share. It comes as TIM CEO Luigi Gubitosi struggles to survive after being under attack from top investor Vivendi.

Gubitosi brought KKR aboard last year as part of a 1.8billion euro deal. FiberCop was the New York-based unit that holds TIM’s last-mile network connecting streets cabinets with people’s homes.

Fixed-line businesses are the most valuable assets of TIM and Rome considers them strategic. Rome has the power to stop any unwelcome moves.

Gubitosi is unable to stop TIM’s revenues from falling. Gubitosi began looking for ways to make more money off TIM’s assets. This included revisiting a plan that TIM’s fixed line grid would be merged into Open Fiber’s.

The previous government sponsored the project, but Prime Minister Mario Draghi canceled it.

The office of the Prime Minister stated that it would be following up on the matter.

Sources have indicated that the government recognizes the necessity to support the 42,500-strong debt-laden group.

KKR’s plan for TIM would be to create its fixed network as a government-regulated asset, similar to Terna and Snam. Two sources familiar with the matter stated earlier Sunday.

CVC and Advent, both private equity firms, looked at possible plans for TIM. They worked with Marco Patuano (former CEO of TIM), who is now a Senior Advisor to Nomura Italy.

The spokespersons for both funds stated that they are open to discussing solutions with all parties to help strengthen TIM.