Two years ago, in November 2021, the US fund Kkr approached Tim with a purchase proposal that left the board of directors wavering. The 11 billion euro offer had brought the government and unions into the field. And he had received the no from Vivendi, a French company and above all the majority shareholder (23.68%) of the main Italian telecommunications company.
Now here we go again, but the thing is more concrete. Tim’s board of directors gave the OK to the sale of the fixed network to Kkr, yet Vivendi deemed the vote illegitimate and promises to fight. Let’s find out what happened.
Tim: green light to sell the network to Kkr
It took three days of meetings. After which Tim’s board of directors gave the OK to sell the network to KKR.
To be precise, The sale of NetCo, the business unit that controls the telephone network, to the US fund KKR was approved by a majority (11 votes in favor and 3 against).
It is the response to the 20 billion euro offer made by KKR last October 16th, and which would have expired on November 8th.
As we read in a press release published by Tim on Sunday 5 November, “the binding offer values NetCo (excluding Sparkle) at an Enterprise value of 18.8 billion euros, without considering any increases in the aforementioned value deriving from the potential transfer of part of the debt to NetCo and from earn-outs linked to the occurrence of certain conditions which could increase the value up to 22 billion euros.”
Times
The operation, we always read in the note, should be completed by the summer of 2024. And it will include the participation of Cassa Depositi e Prestiti, a financial institution controlled by the Ministry of Economy which owns 9.81% of Tim’s shares, and which will participate in NetCo for approximately 20%.
By selling the fixed network to KKR, Tim should reduce its debt by around 14 billion euros, which amounts to around 20.5 billion.
The Kkr fund
The Kkr Fund (Kohlberg Kravis Roberts) was created in 1976 and listed on the New York Stock Exchange, where the company is headquartered, since 2010. Kkr is a global investment company.
It has offices in 21 cities spread across four continents and more than 1,700 employees. The portfolio of more than 100 companies in its private equity funds ensures approximately $244 billion in revenues per year to the US fund’s coffers.
Labriola’s words
Pietro Labriola, CEO of the telecommunications company, expressed his opinion on the sale of Tim’s fixed networks to KKR.
Here is an excerpt from his statement: “Two years of head-on work end with a historic decision: to start the birth of two companies with new development prospects. Both will be the point of reference for the digital transformation of our country because, thanks to this operation, they will be able to accelerate technological development in the telecommunications sector.
It is not the conclusion of our journey but a new beginning. With this operation, in fact, we are giving life to the network infrastructure and at the same time allowing the new TIM to focus on the technological innovation needed to govern the complex digital services market and play a leading role.
[…] I say to all our shareholders that we are giving TIM back the possibility of looking to a sustainable future and of being ready to seize the opportunities that lie ahead. Our objective is to continue on this path traced by the plan approved with the support of our main shareholders, always remaining open to dialogue and to the proposals submitted to us, in particular, by the most important shareholders.”
Vivendi, the majority shareholder, doesn’t agree
The French company Vivendi, Tim’s largest shareholder, not only declared itself against the agreement. But he also called it illegal, as we read in a press release dated Sunday 5 November, because there was no vote at the shareholders’ meeting. Tim’s board of directors instead made it known that the decision to approve KKR’s offer was “the exclusive responsibility” of the board of directors, because it did not involve the modification of the company statute (for which a vote of the assembly would have been necessary).
For Vivendi, on the contrary, “the transfer of the entire Telecom Italia infrastructure network entails a clear modification of Tim’s corporate purpose which would have required a prior modification of the company’s statute, a decision falling within the competence of the extraordinary meeting”.
So “Vivendi will use all legal means at its disposal to contest this decision and protect its rights and those of all shareholders.”