The Italian telecoms operator TIM is evaluating the US investment group’s KKR expression of interest in acquiring the full capital stake of the company, a potential 11 billion euro transaction. The proposal was lodged by the US investment fund at a price of €0.505 per share, a 45.7 percent premium over the share’s closing price on Friday.
TIM described KKR’s expression of interest as “friendly,” with the goal of securing approval from TIM’s board and management. Telecom Italia said its board of directors met and addressed the fund’s interest in initiating a prospective public tender, which is subject to a four-week period of due diligence and clearance from the Italian government, that has veto power over the group’s purchase.
Although TIM is a private corporation, because it is considered a strategic asset for Italy, the Italian government has the right to decline any purchase that it believes would be detrimental to the public interest. As the company is a significant Italian corporation that is also the country’s largest phone provider and owns the majority of Italy’s telecommunications infrastructure, the government is anticipated to carefully assess KKR’s interest, particularly in the light of potential layoffs at TIM.
KKR paid €1.8 billion for a 37.5 percent share in the business’s ‘last mile’ fiber network, FiberCop, last year and has subsequently launched an offer for the entire company. If the KKR bid is successful, it must also assume TIM’s €29 billion in debt, bringing the total price to more than 33 billion euros.
In the light of this purchase attempt , the shares of Telecom Italia increased by more than 27% on Monday morning. Prior to the commencement of Monday’s trading activity, Telecom Italia’s share price had dropped by nearly 50% in the previous five years.