KKR launches $12bn takeover bid for TIM

KKR launches $12bn takeover bid for TIM

22 November 2021 | Natalie Bannerman

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KKR has launched a €10.8 billion ($12 billion) takeover bid for Telecom Italia (TIM) in attempt to take the company private.

According to sources, the news comes following two profit warnings over the last three months aimed at TIM CEO Luigi Gubitosi, who has faced strong criticism from the company's largest shareholder Vivendi, for the aforementioned declining financial performance.

Vivendi is reportedly pushing to replace Gubitosi with TIM Brasil head Pietro Labriola, amid gross debt of approximately €29 billion ($33 billion). In addition, the company's revenue has decreased by a fifth over the last five years due in part to strong competition from companies such as Iliad, Vodafone, Wind Tre and Fastweb.

The €10.8 billion ($12 billion) offer values TIM at share price of €0.505, a premium of approximately 45.7% based on the company's closing price on Friday 19 November.

Following the news TIM confirmed that Board of Directors met on Sunday 21 November, 'under the chairmanship of Salvatore Rossi', to acknowledge and discuss the KKR offer but no indication on whether or not it is proceeding with the offer.

In the statement, TIM further confirmed that KKR offer is considered 'friendly' and requires approval by the company's directors and support by its management.

"For the time being, it is conditional – among others – to an estimated four-week confirmatory due diligence, as well as clearance by key government stakeholders," read the statement.

Rumours have also been circulating that rival private equity firms CVC and Advent are open to solutions to strengthen the company, with a spokesperson for both companies saying CVC and Advent "are open to dialogue with all shareholders to identify a transparent solution" to strengthen TIM.

Speaking to Reuters, a Vivendi spokesperson said "Vivendi is a long-term investor in Telecom Italia and has been since the beginning."

They added that the company "strongly denies having had discussions with any Funds, and more specifically with CVC," and wants to work alongside Italian authorities to ensure TIM's long-term success.