TIM to enter exclusive netco acquisition talks with KKR

Vivendi reportedly vows to block KKR deal going through

The French media group Vivendi intends to fight against KKR’s offer for TIM’s fixed network being accepted according to the Financial Times. The article cited “people with knowledge of the situation”.

Yesterday TIM announced it would proceed in exclusive talks with KRR, after the latest round of bidding for the incumbent’s fixed network.
 
Vivendi has a 23.75% stake in TIM and more than 17% of its voting rights. It has been building its holding in TIM since 2015, investing more than €4 billion. During that time, the value of TIM’s shares have fallen by more than 80% and the boardroom has largely been a battlefield.

Objections
 

The FT says Vivendi’s objection is that KKR’s offer undervalues the fixed network – the company’s crown jewels – but goes deeper. The sources quoted argue that hiving off the fixed infrastructure will not fix TIM’s colossal €25 billion debt and poor management.
 
Hiving off the fixed infrastructure is Pietro Labriola’s plan to reduce TIM’s debt mountain. He was Vivendi’s choice for CEO and took office in late 2021, but has faced constant opposition from Vivendi ever since.
 
The previous CEO, Luigi Gubitosi, left after Vivendi stopped him from pushing through a €33 billion offer from KKR to take TIM into private ownership.
 
KKR’s offer is €22.5 billion, Vivendi thinks it’s worth more than €30 billion. TIM won’t comment on the subject beyond saying it expects to have a binding deal with KKR hammered out by the end of September.

Dissatisfaction all round?
 
Vivendi is controlled by billionaire Vincent Bolloré and its actions are said to have profoundly irritated the right-wing government, which has the power to block any deal involving what is classed as critical infrastructure.
 
It could be a busy summer for lawyers. A rival bidder is a consortium led by Australia’s Macquarie with the state-backed bank, Cassa Depositi e Prestiti (CDP) and has already launched legal challenges against an acquisition deal between TIM and KKR.

The bank holds a stake in TIM, and their bid valued the infrastructure at under €20 billion. The two also each hold a stake in Open Fiber, which competes against TIM, and which is likely to be viewed as an anti-trust issue.