KKR is preferred partner but jilted PE won’t let it lie
Australian fund Macquarie appears to fouling a plan that would Italy to keep hold of its national assets, in the shape of the national network infrastructure. It has launched a number of legal challenges to the Italian state lender Cassa Depositi e Prestiti (CDP) from joining forces with rival private equity fund, the US-based KKR, in a deal to buy the landline network infrastructure of Telecom Italia (TIM), three of Reuters’ sources told the online news service on Monday.
TIM directors had previously set a final deadline of June 9 for potential improved offers by the US private equity firm and a rival consortium comprising CDP and Macquarie, worth €21 billion ($23.1 billion) and €19.3 billion euros respectively. TIM had deemed both inadequate. Insiders told Reuters this month the Treasury would welcome CDP joining forces with KKR for TIM’s telecoms cable framework. One expert even said the ministry was pushing for CDP to drop its separate proposal. But Macquarie is now raising legal issues about a possible alliance between CDP and KKR, three different told Reuters on Monday.
The stalling tactic could be related to the fact that CDP and Macquarie are co-investors in Open Fiber, a smaller rival to TIM. According to the sources, some clauses included in the Open Fiber shareholder pact could give the Australian fund some leeway to complicate any CDP decision to drop the alliance with Macquarie and join KKR’s proposal. One inside witness said Macquarie was aiming to improve its offer with CDP ahead of the June 9 deadline. A source close to CDP said the state lender was still working with Macquarie to respond to some clarifications Telecom Italia had requested over its latest offer, adding no decision has been taken yet. Reuters had two separate sources who said said this month KKR had expressed its willingness to work further on its bid.
The sale of TIM’s most valuable asset is the main option for the phone group to cut its cash-bleeding company’s debts of €26 billion. Prime Minister Giorgia Meloni’s administration will have the final say on any deal as the government of Rome can use its golden power regulation to set conditions or block attempts to take over strategic assets such as TIM’s network.