HomeNewsTelecom Italia shares tank as KKR takeover stalls

    Telecom Italia shares tank as KKR takeover stalls


    Markets don’t like uncertainty and TIM is paralysed by indecision

    Telecom Italia (TIM) shares fell for a straight second day on Wednesday following an internal meeting about plans to revamp the former phone monopoly. The indecision has not inspired confidence since a takeover approach by US private equity company KKR remains unanswered, reports Reuters.

    However, once general manager Pietro Labriola had outlined to TIM’s directors the alternative options to KKR’s €10.8 billion euro offer, the board’s response had been positive, Reuter’s sources say.

    Stock fell two days running

    This was not necessarily good for TIM’s stock however. Reports about a positive reception of Labriola’s plan has actually weakened the speculative appeal of TIM shares, as a consequence of  the uncertainty on whether KKR will act on its takeover proposal.

    “The daily bulletin of events, rumours and scenario permutations, and the combination of uncertainty on management and board orientation, along with political interference, makes investors understandably nervous,” said one Banca Akros analyst.

    TIM shares were 3.7 per cent lower by mid day on Wednesday and the stock has been decimated since the beginning of the week. Labriola’s standalone plan for TIM is to separate the group’s infrastructure assets from its services operations.

    “Should TIM’s board approve Labriola’s split proposal, at the same time it could reject KKR’s non-binding offer,” said Intesa Sanpaolo’s research note.

    Labriola coronation is Friday

    Labriola is expected to be named chief executive on Friday. If appointed he will put his plan to the board on March the second. The CEO-in-waiting is backed by TIM’s single largest investor Vivendi. Vivendi has opposed KKR’s offer on the grounds that it undervalues TIM shares. If TIM accepted the KKR share estimate then Vivendi’s own stake will have halved in value.

    Meanwhile, Vivendi is investing in digital communication group Progressif Media through the purchase of a 8.5 per cent stake from ZeWatchers. The financial terms of this deal were not disclosed. ZeWatchers will own a 30 over cent stake in the company while the three Progressif Media founders, Emile Duport, David Bonhomme and Thomas Ghys, will retain 60 per cent of the company.