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KKR & Co. makes $12 billion offer to take Telecom Italia private

KKR & Co. makes $12 billion offer to take Telecom Italia private

Telecom Italia (TIM), the telecommunications company based in Italy, has reportedly announced that it has received a $12 billion (€10.8 billion) offer from the American investment firm, KKR, which aims to take the biggest Italian phone company private through the deal.

KKR's intervention comes as Luigi Gubitosi, TIM’s CEO, fights for the company’s survival after coming under fire from key investor, Vivendi, after it had to issue two profit warnings within three months.

According to TIM, KKR has put an estimated price of €0.505 for its potential buyout offer, which is a 45.7% premium to the ordinary shares' Friday closing price. The very same amount would be offered by KKR for TIM's savings shares.

The TIM board convened for several hours on Sunday afternoon, chaired by former Bank of Italy official Salvatore Rossi, but showed no sign whether it will accept the strategy in a brief statement. It was highlighted that KKR had described its conduct as ‘friendly’, with the goal of gaining the company's as well as government's support.

As per Italy's Treasury, foreign investment in Italian enterprises is good news for the country, and the market will assess how viable KKR's strategy is if it comes to fruition.

The government will keep a close eye on the developments, particularly plans for TIM's fixed-line assets, which will determine if it exercises its veto power.

Rome has specific anti-takeover authorities to protect vital businesses from foreign takeover offers.

A new owner would also be responsible for TIM's gross debt of 29 billion euros.

Last year, Gubitosi pulled KKR on board a €1.8 billion agreement that gave the New York-situated fund a 37.5% share in FiberCop, TIM's last-mile network that connects street cabinets to people 's homes.

According to sources familiar with the matter, KKR's proposal will see TIM carve apart its fixed network to be controlled as a government-regulated asset, like the model utilized by energy grid firm Terna or gas grid operator Snam.

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Sunil Jha

Sunil Jha has been a part of the content industry for close to two years. Having previously worked as a voice over artist and sportswriter, he now focuses on writing articles for, across a slew of topics, ranging from technology to trade and finance. With a business-oriented educational background, Sunil brings forth the expertise of deep-dive research and a strategic approach in his write ups.