Italian government wants control of TIM’s assets after any takeover

As the KKR takeover bid for Telecom Italia hangs in the air, the Italian government has signalled that it wants to control key strategic assets.

Private equity firm KKR launched the €0.505 per share takeover bid in November last year, which valued the Italian incumbent at €10.79 billion (with TIM’s net debt, and that valuation jumps to €32.95 billion). It requires the approval from the board and management, as well as the support of 51 percent of shareholders and the Italian government.

Alongside this, plans have apparently been floated to merge TIM’s fixed network assets with those of state-backed Open Fiber, which would be run by the state-owned lender Cassa Depositi e Prestiti (CDP). Reuters reports that when asked at a press briefing whether KKR’s bid would jeopardise that plan, Industry Minister Giancarlo Giorgetti said the government “respects the market but any takeover bid must take into account a framework within which the state cannot relinquish control”.

With TIM being the former state monopoly and the Italian government still retaining significant ties to the firm and its assets, any takeover bid will obviously take on an extra level of complexity. However that seems to have been exacerbated with Vivendi’s announcements that it is open to state intervention.

This and the offer in general seemed to have created management chaos at TIM. In December its former CEO Luigi Gubitosi accepted €6.9 million to vacate his board seat, having stepped down in November as CEO. It seemed at the time that this was a precondition for the board considering the takeover bid by KKR, perhaps at the behest of substantial minority shareholder Vivendi, who is reported to have not been keen.

The remaining top brass have yet to announce how they are going to respond to the bid, which in turn Vivendi and the government will have to take a position on. Stay tuned, folks.


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