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TIM to begin KKR talks and Open Fiber merger

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Telecom Italia (TIM) said it will begin official discussions with KKR nearly four months after the US investment firm made a non-binding offer of $11.8 billion for the business. TIM said it has invited its CEO and chairman to speak with KKR to learn more about its prospective proposal after an almost six-hour board meeting on Sunday. 

 

TIM noted in a statement that its board of directors had directed CEO PietroLabriola and chairman Salvatore Rossi to conduct formal conversations with KKR in addition to those already held by its advisers in order to maximize shareholder value in respect to other potential interested parties. The release  went on to say that the goal was to get information on the financial and industrial appeal and execution of KKR’s offer, as well as to define the length and breadth of the applicable confirmatory due diligence sought by the fund prior to a formal bid.

 

The Italian government, which has specific rights to protect important enterprises such as TIM from unwelcome foreign investment, has yet to take an official position on KKR’s proposal.

 

As part of the recovery plan unveiled earlier this month by new CEO Pietro Labriola, TIM said it planned to investigate a long-rumored merger with state-backed wholesale provider Open Fiber. According to internal calculations, the long-awaited Open Fiber merger may enhance TIM’s stock price by roughly $1, according to individuals familiar with the situation.

 

In recent years, TIM has seen declining revenues and dwindling margins due to fierce competition in its key domestic market. Its stock reached an all-time low last week after the business reported a record loss for 2021 and Labriola presented his restructuring plan.