TIM seeks interest in €6 billion Enterprise unit

TIM is reportedly seeking offers for its Enterprise business, while separately its board of directors is deliberating the latest bids tabled for its networks unit.

The Italian incumbent, which identified its Enterprise unit as an M&A candidate under the restructuring plan it presented a year ago, started sounding out potential investors earlier this month, Bloomberg reported, quoting unnamed sources as saying that CEO Pietro Labriola sent out invitation letters.

The newswire noted that the Enterprise business, which houses the Noovle cloud business, security unit Telsy, and Olivetti, could be worth in excess of €6 billion in total, although TIM is looking to sell a minority stake.

That valuation looks pretty accurate. In March last year TIM confirmed receipt of a bid from CVC Capital Partners for a minority holding in the Enterprise business, which had yet to be fully fleshed out as a separate entity at that point. It did not disclose the size of the offer, but reports in the Italian press later claimed that the bid valued TIM Enterprise at €6 billion.

Once TIM had shared full details of its separation plan, La Repubblica claimed that CVC had upped its offer to value the unit at €7 billion, its first bid having been dismissed as too low. While that claim was swiftly denied by both CVC and TIM, it seems part of the story must have been true: that TIM rejected the private equity firm’s first bid because it thought it could raise more for the assets in questions.

TIM itself shared nothing about how the approach from CVC turned out, although it’s pretty safe to assume it declined the offer.

And given that TIM’s gross financial debt stood at getting on for €32 billion at the end of March, it can hardly come as a surprise that it is keen to extract as much as possible out of bidders interested in its assets.

Indeed, having sent interested parties away with requests for more money on several occasions, TIM’s board has been weighing up the latest offers for NetCo – comprising its fixed-line assets, its FiberCop fibre-to-the-home (FTTH) unit, and international wholesale operator Sparkle – for the past couple of days, with deliberations due to end on Thursday.

“No decision has been taken at this stage,” it said earlier this week, after reports emerged in Italy that the telco was leaning towards working with KKR.

Italian financial daily Il Sole 24 Ore on Thursday reiterated that rumour, noting that barring any major surprises, TIM’s directors will plump for the KKR bid, which it puts at €23 billion including €2 billion in earn-outs, since it is higher than the offer tabled by the Macquarie/CdP Equity consortium and is more likely to gain antitrust approval.

It cites market rumours as saying that TIM will select KKR as a preferred bidder, adding that it could be joined by other potential investor partners, naming in particular Italian infrastructure fund manager F2i, or Fondi Italiani per le Infrastrutture. Exclusive talks between KKR and TIM would likely last until late August or early September, it said.

The wait continues. In the meantime, we may or may not find out whether CVC will come back to the table for TIM Enterprise, or indeed whether any other interested parties are lining up. If the seemingly interminable NetCo sale process is anything to go by, information on TIM Enterprise may well be scarce.

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