Telecom Italia’s Network Up for Sale: Latest Updates on Offers from KKR and CDP

2023-06-10 12:18:00

The soap opera continues. For the third time, the Italian Caisse des dépôts (CDP) and the American investment fund KKR have submitted two non-binding offers to acquire the fixed network of Telecom Italia (TIM), the telecommunications operator announced on Friday. These two proposals will be examined by the company’s board of directors at its next meetings scheduled for June 19 and 22. Their amount is not known, while previous offers have been deemed insufficient.

TIM’s management presented a strategic plan in June 2022 focused on the split between the fixed telephony network, put up for sale, and its service activities. The sale of the network should enable Telecom Italia to reduce its enormous debt, which rose to 25.8 billion euros in the first quarter.

A third offer still insufficient?

The filing of these offers follows an express request from the CEO of Telecom Italia, Pietro Labriola, to which the two companies had until June 9 to respond. By relaunching KKR and CDP, the manager had taken the opposite view of Vivendi, the group’s largest shareholder, who was in favor of stopping negotiations, judging the offers largely insufficient.

And for good reason: the amount of the offers filed yesterday should always remain far from the expectations of Vivendi, which had set the bar very high by claiming 31 billion euros from 2022, a source familiar with the matter told AFP. The CDP had proposed in May 19.3 billion euros once morest approximately 18 billion euros during a first offer, while KKR made a proposal of 21 billion euros, following 20 billion euros previously.

In mid-May, the CDP had hinted that there was very little room to raise its offer. But finally, the board of directors of the CDP gave the green light to a new offer, confirmed the public bank in a press release. ” The offer will be valid until July 30 added the CDP, 82.7% controlled by the Italian state.

Towards a two-headed buyer?

Faced with this discrepancy between the offers and the amount requested by TIM’s shareholders, the Italian Ministry of the Economy announced in early May that it would be ready to support a possible joint offer by CDP and KKR. And for the moment the two potential buyers do not seem to exclude this scenario. The State has real power in the affair, since behind Vivendi, which holds a 23.75% share, it is the second largest shareholder in Telecom Italia, through the 9.81% stake held by CDP.

KKR is already a 37.5% shareholder in FiberCop, Telecom Italia’s network operator. A participation for which the fund had disbursed 1.8 billion euros in 2021. Enough to find common ground?