The company said in a statement that Telecom Italia’s management met on Sunday to evaluate the offer made by the US fund KKR to buy the Italian telecom operator.
The offer, which is “indicative and non-binding”, proposes payment of 0.505 euros per share to the Transalpine operator, which represents a premium of 46% over the closing price on Friday, when the company’s shares were worth 0.35 euros.
The statement details that the operation will be conditional on KKR having a minimum 51% share capital and that the fund’s intent is to withdraw the company from the exchange. Thus, KKR’s proposal values Telecom Italia at €10.8 billion, with the company’s current market value of €7.55 billion.
The high premium offered in relation to the current level of shares is seen as a way to make the transaction more attractive to some of the major shareholders, namely the French company Vivendi, which owns 23.75% of the share capital, and Cassa Depositi e Prestiti which controls 9.81%.
KKR has classified its expression 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 potential resistance to Vivendi. “A potential takeover offer by Telecom Italia for KKR could face an insurmountable hurdle as Vivendi will have to resist, given that the 24% it holds in the company was bought at an average price of €1.03 per share,” he says.
Over the past five years, Telecom Italia’s stock has fallen in value by nearly 50%.
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