Tim at the crossroads: Opa yes, Opa no. Shareholders, analysts, investors, stakeholders but also the world of politics are all eyes on the decision of the board of the telephone company this afternoon, Sunday 13 March, regarding the offer proposed by the american fund Kkr four months ago on 100% of the shares of the first Italian telephone company. In November, the American fund, which is already present in Tim's secondary network, presented a non-binding expression of interest for 10,8 billion euros (i.e. 0,505 euros per share) and aspired to obtain "the approval of the directors of the Company and the support of the relevant institutional subjects” to launch a friendly takeover bid. But that approval and support from top management never arrived and the takeover bid has for now remained at a standstill, to the great disappointment of the Stock Exchange which has always preferred the egg today to the chicken tomorrow.
With the expression of interest by Kkr, the share had flown from 0,35 to 0,45 euro until 3 March when the quotation fell to 0,40 in the wake of the disappointing 2021 accounts to the uncertainties regarding the implementation of the new 2024 business plan and above all to the departure of the takeover bid. So much so that the first shareholder Vivendi it devalued the shares from 0,857 to 0,657 per share, the same one that had deemed the Kkr proposal too low but which continues to give full support to the managing director Pietro Labriola.
Faced with so much uncertainty about the ownership structure, the former public telephone monopolist will inevitably continue to ride on a roller coaster. This is why some shareholders and managers such as Kairos and the Assogestioni advisors of Tim's board are asking for the opening of the data room at Kkr, which is a bit the antechamber of the takeover bid. But let's take a step back to understand what is happening in the first Italian telecommunications company.
Tim at the crossroads: Kkr's offer
The American private equity fund had come forward in November with the intention of launching atakeover bid on 100% of the shares, aimed at the delisting (i.e. the withdrawal from the stock exchange) at the indicative price of 0,505 euro. An offer that was certainly intriguing at the time given that the market price was 0.334 euro per share with a potential premium of 50%. The price, if confirmed, would even represent a 70% premium on the current stock exchange values.
The non-binding Expression of Interest was not convincing due to the series of conditions to which it was linked, including the carrying out of a due diligence confirmation of four weeks. A practice often applied in cases of friendly offers with the aim of obtaining information on the adequacy of the premium offered and on the validity of the business plan.
From that moment, however, around the match over the control of the first Italian telecommunications company, which in the meantime has changed yet another CEO, the fog has descended while Kkr has closed in an impenetrable silence. For its part, the telephone group went ahead with a plan that brings a single infrastructure for publicly controlled broadband to Cassa Depositi e Prestiti (TIM shareholder with 9,8%) and the merger between the network secondary school of Tim (Fibercop) with Open Fiber.
Tim at the crossroads: the game with Open Fiber remains open
In the opinion of Labriola's consultants, on an industrial level, the separation between the network and services could lead Tim to 1 euro per share, even 1,3 euros per share if an integration of the networks with the company owned by Cdp (60% ) and the Australian fund Macquarie (40%). But in a few years.
As regards the strategic options for the unbundling of the network (Netco and ServCo), however, the CEO's plan is struggling to take shape. So much so that the details on the numbers are postponed to the end of June, obviously based on the road that will be decided to take, whether that of the commercial partnership with Open Fiber or the one paved by the offer presented by Kkr. But it is unlikely that the Board of Directors will be able to close the doors to the US fund, already a financial partner and shareholder of 37,5% of FiberCop, the company created by the telco in 2018 for optical fiber.
In reality, the KKR plan and the Labriola plan are not very different and both aim to dismantle Tim's current vertical integration and to divide the company into two companies: the network on one side and services on the other. The real watershed depends on the relationship with the Stock Exchange. KKR would like to split Tim after proceeding with the delisting while Labriola thinks Tim can be reorganized and split into two listed companies without going through the delisting.
The role of the Treasury in the match of the single network
The position of the MEF has a significant influence on the decisions of Tim's board of directors. The question concerns the opportunity for the CDP - which is a shareholder of Tim and which has control of Open Fiber - to give the go-ahead to Open Fiber to sign a memorandum of understanding with the telco to move forward the game of the single network.
The two operators would be committed to defining the offers to be delivered by the end of March in order to participate in the calls for tenders Italy plan at 1 Giga to bring ultra-broadband to the gray areas of the country. But how can your companies integrate if they win the tender lots separately?
The question remains delicate, because it does not only concern the future of the two companies but also the funds of the Pnrr (3,8 billion euros) which, if not assigned by June, Italy would lose.
Kairos pressuring Tim's board of directors: "Kkr refusal against shareholder interest"
Fund manager Kairos, Guido Maria Brera – who also represents Norges, the Norwegian fund which is Tim's eighth institutional investor with a stake of over 1% – wrote a letter to Tim's board expressing "deep bewilderment and concern at the attitudes held and decisions adopted" by the board in relation to the expression of interest sent by Kkr. This "a priori closure with respect to the facilitation of the presentation of a binding offer "could cause considerable damage to the company and its shareholders" as it precludes an option for the latter, regardless "of the decision to join or not would have offered a valuation floor ”. And not only that, for Kairos' number one, the concern has worsened in the light of the strategic plan signed by Labriola "which has led to a vertical collapse of the stock" and "provides for potential extraordinary operations that could activate the right of withdrawal". Reason why, according to press rumors, the American fund could lower its offer to 0,40.
In short, the KKR-Tim case is a great rebus and today we will see if the telephone company's board of directors will begin to unravel it and in which direction.
