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Shares of Telecom Italia jumped more than 22% on Monday morning after US private equity giant KKR launched a € 10.8 billion ($ 12 billion) takeover offer for the world’s largest company. phone from Italy.
The non-binding proposal values the former telephone monopoly at 0.505 euros per share in cash, indicating a premium of 45.7% on the closing price on Friday, and amounts to more than 33 billion euros including debt.
Telecom Italia’s reported gross debt exceeds € 29 billion, and S&P last week lowered the company’s credit rating to further below investment grade level. The takeover offer would be closer to 33 billion euros in total with the debt taken into account.
Telecom Italia CEO Luigi Gubitosi has come under pressure from leading investor Vivendi after two profit warnings in a single quarter.
The French media titan has long been at daggers drawn with activist American hedge fund Elliott Management, a standoff that led to the ousting of Gubitosi’s predecessor, Amos Genish, in November 2018.
Before trading began on Monday, the struggling phone company had seen its stock price drop nearly 50% in the past five years.
The Italian Treasury said foreign interest in Italian companies was “good news for the country”.
Telecom Italia’s board, chaired by former Bank of Italy deputy governor Salvatore Rossi, met on Sunday to discuss the offer, which KKR described as “friendly,” according to a statement. published Monday.
“For now, this is conditional – among other things – on a confirmatory due diligence estimated at four weeks, as well as approval from key government stakeholders,” the statement added.
Deutsche Bank also said on Monday that the news was “positive for TI and the industry at large.”
“It also shows how much TI depends on strategic action, which may be easier to do in private hands,” said telecommunications equity analyst Keval Khiroya.
Victoria Scholar, chief investment officer at UK online brokerage firm Interactive Investor, said the offer “signals a wider appeal for US private capital to deep pockets in the European telecommunications sector,” and could help reverse the crisis. recent fortune of Telecom Italia.