Shares of Telecom Italia fell more than 6% Wednesday on investor disappointment at the value assigned by new offerings to its Sparkle wireline and submarine cable unit.
Analysts expressed concern that the offers fell well short of what the group’s main shareholder, Vivendi, was aiming for for the unit and that a quick fix to restructure the company is unlikely.
Telecom Italia said on Tuesday it had received non-binding offers from KKR and Cassa Depositi e Prestiti (CDP), which is working with Macquarie.
Telecom Italia did not provide further details, adding that its board of directors will evaluate the offers on May 4.
According to two sources familiar with the matter, CDP and Macquarie have offered 19.3 billion euros for the assets. KKR’s proposal amounts to 21 billion euros, but 2 billion is conditional on meeting certain targets, another source commented.
Both proposals exceed the initial offers of both groups by around €1 billion.
Intesa Sanpaolo cited that the proposals remain far from the 31 billion euros sought by Vivendi, which owns 24% of Telecom Italia, being its main shareholder.
“We expect another period of dialogue and the situation is still very fluid in terms of asset valuation, antitrust implications and government issues,” said Intesa Sanpaolo.
Telecom Italia wants to sell its biggest asset in a restructuring strategy spearheaded by Chief Executive Officer Pietro Labriola, who once led the Brazilian arm of the TIM group. Telecom Italia has a “junk” credit rating and faces a continuing decline in revenues in its home market.
Banca Akros said in a report that improvements to the offers have been limited and that “the possibility of a simple sale is no longer so high and other options may arise.”
Source: Terra
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