KKR Wants to Buy Telecom Italia

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KKR Wants to Buy Telecom Italia

The US investment firm KKR has moved to acquire Telecom Italia (TIM) for $37.5 billion – an equivlent of € 33.2 billion – including debt.

The “non-binding and indicative” offer has a chance of becoming one of the largest private equity buyouts in Europe. It was discussed by TIM’s board on Sunday, November 21. If a bid for Italy’s incumbent telco proves successful, the firm will go private and thus be de-listed from the Italian Stock Exchange “Borsa Italiana”.
In communications and services terms, the potential deal is massive. Telecom Italia serves businesses and consumers with broadband and mobile services and is also an important IT services provider to enterprises and the Italian government. In addition, the company owns the Sparkle international telecoms and data center inter-connectivity network.
Any deal is expected to attract the close regulatory attention of the Italian government and perhaps the European Commission, as the firm’s networks and data centers are highly inter-connected with other countries. The security of Italian government data is an issue that will also be considered.
KKR’s offer values TIM’s equity at €10.8 billion, with the rest of the proposed cash outlay taken up by the firm’s massive € 22.5 billion debt.

The Indication of Interest was qualified by KKR as ‘friendly’ and aims at obtaining approval from TIM’s directors and support from the company’s management,

said TIM’s board, in a statement to shareholders. It went on:

For the time being, it is conditional, with an estimated four-week confirmatory due diligence period, including clearance by key government stakeholders.

KKR acted after TIM posted two profit warnings in the space of three months. The private equity firm already has a minority stake in a TIM unit delivering broadband to premises. KKR just recently partnered with Global Infrastructure Partners to acquire data center operator CyrusOne for $15 billion.

Author: Rainer Claaßen
Image Credit: Telecom Italia

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