KKR launches takeover bid for Telecom Italia, shares surge

US private equity firm Kohlberg Kravis Roberts is looking to acquire Telecom Italia in a deal worth potentially €33bn.

The board, chaired by Salvatore Rossi, met on Sunday before issuing a short statement confirming that KKR was considering taking it private via a cash offer of €0.505 per share.

A 45.7% premium to Friday’s closing price, the indicative and non-binding offer for both ordinary and saving shares would value the equity at around €10.8bn. However, TIM also has net debt of around €22.5bn.

The offer is conditional upon a minimum level of acceptance of 51% of both share classes, and a four-week due diligence process has now begun. TIM said KKR believed the approach to be "friendly" and that it was seeking approval from both the board and Italy's government.

Rome has special anti-takeover powers which are aimed at stopping companies of strategic importance being acquired by foreign rivals.

However, according to Reuters, Italy’s Treasury said foreign interest in Italian companies was "positive news for the country" and that the market would assess any formal bid made by KKR.

TIM did not comment further, nor did it give any indication if it would back the offer or not.

French media giant Vivendi is TIM’s largest investor, with a 24% stake, while bank Cassa Depositi e Prestiti owns nearly 10%. KKR already holds a 37.5% stake in FiberCop, TIM’s last mile network.

TIM has issued two profit warnings this year, which have weighed heavily on the share price. However, the stock rallied on the prospect of a possible takeover, and the shares were trading 27% higher as at 1045 GMT.