CVC denies new approach for TIM Enterprise, but bids will come

Private equity firm CVC Capital Partners has dismissed media reports that it has made an increased offer for TIM’s enterprise business.

CVC “denies that a second offer has been presented for the acquisition of a minority stake in a newly established TIM company renamed Enterprise Co,” the private equity firm said in an Italian language statement reproduced by La Repubblica this week.

The denial came shortly after that same Italian newspaper published a report to the contrary, claiming that CVC had tabled a bid that valued TIM’s enterprise unit at approximately €7 billion. Naturally, its sources were anonymous.

“The only offer brought forward to TIM’s board of directors dates back to 25 March 2022, as TIM revealed on 28 March,” CVC’s statement reads.

On that date, TIM did indeed announce an approach from CVC, saying the investor had made a non-binding offer for a minority stake in its enterprise business, which at the time had yet to be fully fleshed out as a concept. It did not disclose the size of any offer.

La Repubblica’s sources, however credible they may turn out to be, claim that that initial offer valued TIM’s enterprise assets at €6 billion, which is a fair amount lower than this new reported-but-discredited bid. 10% lower, according to the paper, once restructuring costs are factored in. It believed CVC’s second offer included the requirement for TIM to absorb all such costs, which it estimates at around the €300 million mark. Therefore, CVC must have offered about €3.3 billion for a 49% stake, including debt, its initial report on the upped offer claimed.

The increase was based on the fact that TIM CEO Pietro Labriola formally presented the separation plan at last week’s capital markets day, the paper said. The presentation included details of the new TIM Enterprise, which comprises amongst other things the Noovle cloud business, security unit Telsy, and Olivetti, and made it clear that the unit is in line for possible M&A.

Further, TIM has also won the €2.7 billion contract to manage the cloud services project for Italy’s public administration, the paper said. That’s the cloud hub project won by Fastweb last month; earlier this week TIM revealed it had exercised its right to match the terms of Fastweb’s bid and fulfil the contract itself.

That’s a lot of hypothesising for a story that now looks to be incorrect. But while it might not quite be a case of no smoke without fire, there could still be the hint of a flame behind this report. If a new offer has not been formally made, maybe it’s just a matter of time.

Either way, there will be offers for TIM Enterprise. TIM has not provided much detail on what it expects to happen at the business, other than to note that it is looking to drive stronger integration between its various big name units and to shift the revenue-generation balance away from connectivity towards cloud services. But there are business there that will doubtless attract investors, whatever the nature of any M&A TIM has in mind.

CVC may not have made a second offer, but there will be offers. And probably in the not-too-distant future.

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