Telecom Italia’s executives met this Sunday to evaluate an offer from the US fund KKR to buy the Italian telecom operator, the company said in a statement.
The offer, which is “indicative and non-binding,” proposes to pay € 0.505 for each share of the transalpine operator, a 46% premium over Friday’s closing price, when the company’s shares were at € 0.35.
The statement clarifies that the transaction will be contingent on KKR reaching at least 51% of the capital and that the fund intends to withdraw the company from the stock exchange. Thus, KKR’s proposal estimates Telecom Italia at about 10.8 billion euros, and the current market capitalization of the company is 7.55 billion euros.
The high premium on offer relative to the current share level is seen as a way to make the deal more attractive to some of the key shareholders, namely the French company Vivendi, which owns 23.75% of the capital, and Cassa Depositi e Prestiti, which controls 9.81% of the shares.
KKR has classified its expressions of interest as “friendly” and requires the approval of the operator’s management.
Despite the premium given the current price, Erhan Gurses, an analyst at Bloomberg Intelligence, points to the likely resistance of Vivendi. “Telecom Italia’s potential takeover bid for KKR could face an insurmountable hurdle because Vivendi will have to resist given that almost 24% of the company’s shares were bought at an average price of € 1.03 per share,” he says.
Over the past five years, Telecom Italia shares have depreciated by about 50%.
