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Milan (AFP) – After leaving the suspense hanging for nearly four months, Telecom Italia (TIM) ended up Sunday by agreeing to start “formal discussions” with the American investment fund KKR with a view to a possible takeover offer.
TIM’s board of directors has decided “unanimously” to mandate CEO Pietro Labriola and Chairman Salvatore Rossi to enter into “formal discussions” with KKR, in order to study the “attractiveness and practicality” of a potential offer.
MM. Labriola and Rossi were also responsible for negotiating with KKR “the duration and scope” of a possible audit of the accounts.
The fund had submitted in November a non-binding proposal of 10.8 billion euros for the acquisition of all of TIM, and wanted to examine its accounts before launching a takeover bid.
KKR’s offer, ie 0.505 euro per share, represents, if it is maintained, a premium of 75% on the current share price (0.288 euro).
In November, however, it was deemed too low by TIM’s main shareholder, Vivendi, which entered the capital in 2015 at an average purchase price of 1.071 euros per share.
At the same time, the board of directors confirmed “its desire to implement Mr. Labriola’s” strategic plan which provides for a split between the fixed telephony network and the service activities, a measure also envisaged by KKR.
If the board of directors had unanimously approved this strategic plan ten days ago, presented as an alternative solution to KKR’s offer. But the recent stock market debacle has changed the game.
The action had indeed started to collapse on the Milan Stock Exchange on March 3, the day following the publication of the plan and an abysmal net loss of 8.65 billion euros in 2021, and had ended at its all-time lows for the next two sessions.
Then the stock rallied following Mr. Labriola had a series of meetings with investors to convince them of the merits of his plan, but it did not fully recoup its losses.
Faced with the absence of a response to KKR and made nervous by the stock market crash, investment funds and small shareholders had begun to grow impatient.
© 2022 AFP
