US private equity major KKR has secured approval from Telecom Italia (TIM) for its €19bn bid to acquire the telecoms company’s fixed-line network, in what will be one of the first landline grid deals in a major European country, according to a report by Reuters.
The deal, backed by Prime Minister Giorgia Meloni’s conservative administration, involves an asset that Italy deems of national strategic importance as the country works to bridge its digital divide with the rest of the European Union.
The sale is a key plank of TIM CEO Pietro Labriola’s plans to revive the debt-laden, junk-rated former phone monopoly, which can ill afford the investments its ageing grid needs.
TIM’s board began a review of KKR’s offer on Friday as part of CEO Pietro Labriola’s plans to revive the debt-laden, junk-rated former phone monopoly, and extended the meeting into the weekend with teh sale finally been approved on Sunday with 11 directors in favour and three against.
The deal, which should close in the summer of 2024, could finally be worth to to €22bn if certain conditions – mostly linked to a combination of TIM’s grid with state-backed fibre optic rival Open Fiber – are met, according to TIM, and will allow the company to reduce its debt pile by around €14bn.
The deal would also see TIM reduce its 40,000 headcount by half and allow it to focus on its service operations.
Vivendi, which owns 24% of TIM, has been seeking a higher price and has questioned the sustainability of the business left behind. It said on Sunday it considered the board’s decision “unlawful”, believing it required an extraordinary shareholder vote, and has vowed to use “any legal means at its disposal to challenge” it.
