KKR nonetheless thinking about TIM buyout, needs to debate Open Fiber deal

MILAN, March 24 (Reuters) – KKR (KKR.N) stays thinking about taking up Telecom Italia (TIM) (TLIT.MI) and likewise needs to debate the telephone group’s personal plans to mix its fastened line belongings with these of state-backed rival Open Fiber, two sources stated on Thursday.

KKR submitted a non-binding 10.8 billion euro ($11.9 billion) takeover proposal for TIM in November, having already invested 1.8 billion euros for a 37.5% stake within the group’s last-mile fixed-line community final yr.

Italy’s largest telecoms firm left the New York-based fund ready for almost 4 months with out a solution earlier than TIM’s board agreed earlier in March to have interaction in talks.

TIM shares rose as a lot as 12% on Thursdayto commerce at slightly below 0.34 euros, as KKR remained within the sport and different non-public fairness corporations circle with a view to investing in components of its enterprise below a break-up state of affairs for the corporate.

Nonetheless, the inventory stays effectively in need of the 0.505 value per share at which the KKR proposal was pitched.

In a letter responding to questions from TIM on its provide, KKR caught to a request to hold out a due diligence evaluation earlier than deciding on whether or not to proceed however has narrowed the scope of the knowledge sought, the sources added.

KKR wrote it had “constructive exchanges” with Italian authorities on its proposal, the folks stated.

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Whereas a merger of Open Fiber was not a part of KKR’s plans for TIM, the fund needs to debate with the corporate the antitrust implications of a such a deal and the way it can create worth for the FiberCop enterprise through which KKR is already an investor, the sources stated.

Grappling with fierce competitors in its home market, debt-laden TIM has been hit by a number of downgrades by main score companies this month after reporting a report annual loss and a weak outlook.

In a bid to revamp the beleaguered operator, newly-appointed Chief Govt Pietro Labriola has unveiled plans to separate TIM’s service operations from its home fastened community operations to unlock worth.

TIM’s largest shareholder Vivendi (VIV.PA) has slammed the KKR method as too low and the French media group stated there was “untapped worth” in TIM.

A break-up of TIM may assist revive a long-held mission to merge TIM’s fastened line belongings with these of Open Fiber, a transfer advocated by state lender CDP to keep away from a duplication of heavy funding wanted to improve the nation’s community.

An Open Fiber merger may present a 1 euro enhance to TIM’s shares in line with TIM’s inner calculations, sources acquainted with the matter have stated.

CDP owns a stake of almost 10% in Telecom Italia and 60% in Open Fiber.
($1 = 0.9099 euros)

Reporting by Elvira Pollina; writing by Valentina Za
Modifying by Keith Weir

Our Requirements: The Thomson Reuters Belief Ideas.