Telecom Italia picks advisers for KKR takeover approach


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MILAN, Dec 6 (Reuters) – Telecom Italia (TIM) (TLIT.MI) said on Monday it has picked Goldman Sachs (GS.N) and LionTree to advise Italy’s biggest telcoms group on the takeover approach by U.S. fund giant KKR (KKR.N).

KKR made its non-binding offer for TIM, just before a boardroom row forced group CEO Luigi Gubitosi to step down following a clash with top investor Vivendi (VIV.PA) after two profit warnings since July.

A wide range of banks pitched for an advisory role in what would be Europe’s biggest ever private equity deal worth 33 billion euros ($37.3 billion) including debt.

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TIM said in the statement the advisers would help the company in also assessing any potential “strategic alternatives” to develop the group.

KKR’s offer is conditional on support from TIM and the Italian government, as well as a four-week due diligence which will need a green light from the company’s board due to meet on Dec.17.

But the management upheaval and division within the group has complicated decision-making, sources have said. read more

After losing its fourth chief executive in six years, TIM’s veteran executive Pietro Labriola was promoted as general manager. However, a new CEO cannot be named until Gubitosi or another director vacates a board seat.

KKR’s approach received a cold response from Vivendi, which faces a large capital loss on its 24% TIM stake at the 0.505 euros per share offered by the U.S. fund.

Reversing a long-standing stance, the French media giant said it was open to handing control of TIM’s fixed network to the state as part of “an institutionally guided strategic project”. read more

Over the weekend, the Italian press reported a meeting between Vivendi and Treasury-owned investor CDP, TIM’s second-largest shareholder, over a possible alternative plan to KKR.

Two sources close to the matter told Reuters that Vivendi was trying to build an alliance with CDP. Vivendi and CDP declined to comment.

Trying to revive a project that stalled under Prime Minister Mario Draghi, the Treasury is still studying a possible merger between TIM’s fixed network assets with those of CDP-backed rival Open Fiber, a source said last month.

However, Draghi is not actively involved in talks at present and there are contrasting views within the government over the best course of action over TIM, political sources said on Monday.

KKR, which consulted Rome before making its offer and already holds a 37.5% stake in TIM last-mile grid,, plans to carve out the network and give CDP a leading role in overseeing it, sources have said.

TIM’s fixed line business provides Italy’s main telecoms infrastructure and plays a major role in broadband rollout efforts on which Rome plans to spend billions of euros of European Union funds to improve coverage.

Shares in TIM ended 1.4% down on Monday having dropped 4.4% to 0.444 euros to trigger a trading suspension earlier in the session amid uncertainty over KKR’s offer.

(This story has been refiled to fix figure in paragraph 3)

($1 = 0.8854 euros)

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Reporting by Elvira Pollina, Giuseppe Fonte, Stephen Jewkes
Writing by Valentina Za
Editing by David Goodman and Alistair Bell

Our Standards: The Thomson Reuters Trust Principles.

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