The deal, if approved by the firm’s board and the Italian government, would be one of the biggest European private equity buyouts in history
Telecom Italia shares climbed more than 30% on Monday after U.S. private equity giant KKR launched a 10.8 billion euro ($12 billion) buyout bid for Italy’s largest phone company.
The non-binding proposal values the former phone monopoly at 0.505 euros ($0.57) per share in cash, indicating a 45.7% premium on Friday’s closing share price, and rises to more than 33 billion euros ($37.07 billion) including debt.
The deal, if approved by the firm’s board and the Italian government, would be one of the biggest European private equity buyouts in history.
Telecom Italia’s reported gross debt exceeds 29 billion euros ($32.57 billion), and S&P last week downgraded the company’s credit rating further below investment grade level. The buyout offer is reportedly closer to 33 billion euros ($37.07 billion) in total with the debt factored in.
Telecom Italia CEO Luigi Gubitosi has been under pressure from top investor Vivendi after two profit warnings in a single quarter.
The French media titan has long been at loggerheads with U.S. activist hedge fund Elliott Management, a tussle that led to the ousting of Gubitosi’s predecessor, Amos Genish, in November 2018.
Prior to the start of trading on Monday, the embattled phone company had seen its share price drop nearly 50% over the past five years.
The offer raised the prospect of a bidding war as rival private equity firms CVC and Advent said they were ‘open’ to discussions with the company.
Italy’s Treasury said foreign interest in Italian companies is ‘good news for the country.’
The Telecom Italia board, chaired by former Bank of Italy Deputy Governor Salvatore Rossi, met on Sunday to discuss the offer, which was characterized by KKR as ‘friendly,’ according to a statement published Monday.