Vivendi whines to EU over TIM network deal

Turning to Brussels is the latest move in the French firm's ongoing mission to have the NetCo sale to KKR overturned one way or another.

Its letter, dated 18 January and addressed to the EU Directorate General for Competition, has not been made public, but Reuters had sight of it on Tuesday. According to quotes the newswire lifted from the letter, Vivendi asked the European Commission to pay "attention to the role and involvement of the Ministry of Economy" in the deal.

Its concern seems to be that when the deal is presented to the EU – Reuters recently reported that KKR must notify the Commission by the end of this month – it will not give an accurate appraisal of the state's role in the transaction.

"Despite the relevance of the Treasury involvement in the transaction for the Commission's competition assessment, Vivendi is concerned...that the notification may fail to properly disclose it or may downplay it," the letter apparently reads.

Getting the deal past EU competition regulators is one of the remaining major hurdles that TIM and KKR will need to surmount if they are to reach their goal of closing the deal by mid-2024. With Vivendi opposing the deal as strongly as it does, it's hardly surprising that it is turning to the EU for help here.

The company – TIM's biggest shareholder with a stake of almost 24%, followed by state-owned lender Cassa Depositi e Prestiti (CDP) with nearly 10% – was against the sale of NetCo from the start. Aside from being fundamentally opposed to the whole concept of separating off the network, Vivendi also wanted heavily recompensing for its share of it. The final deal, which will see KKR pay €18.8 billion, possibly rising to €22 billion, was billions of euros below Vivendi's expectations.

It went down the legal route almost before the ink was dry on the purchase agreement, with a view to persuading the courts that various shareholder rights have been impinged in the way the deal was managed. And now it's trying use European regulators in its campaign too.

Meanwhile, those on the other side of the transaction are pushing on with it.

Italian infrastructure fund manager F2i earlier this week announced that it has raised the money it needs to participate in the deal, its investors having shown themselves to be particularly keen to get involved.

F2i needed to hit an investment target at the fund it will use to buy into NetCo – F2i-Rete Digitale, Fund VI, that is – and did so. As such, it will plough €1 billion into NetCo, alongside KKR and the Ministry of Economy and Finance, giving it a stake in the business of around 10%, as well as governance and management rights

Sounds like a bargain. Perhaps that what the fund's investors thought too.

"The funding target was hit in an extremely short space of time, thereby demonstrating the interest of investors, in particular banking foundations, pension funds, insurance companies and family offices, in participating in the transaction," F2i revealed.

Vivendi must be seething.