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KKR extends bid for Telecom Italia’s grid as govt looks into offer

U.S. fund KKR & Co Inc has extended a non-binding offer for Telecom Italia’s prized landline grid by four weeks to March 24 at the behest of the Italian government, TIM said late on Tuesday.

It said the government wanted more time to analyse in particular the powers it can exercise in a sector which is deemed strategic for the country.

Under Italian legislation, Rome can use its ‘golden powers’ to fend off unwanted interest for assets of national importance.

The deadline’s extension comes as plans by Italian state lender CDP, which is TIM’s second largest investor, to organise a counter bid for the same asset stalled in the absence of government backing.

The right-wing administration of Prime Minister Giorgia Meloni has repeatedly said it wants to retain public control of TIM’s grid, but there is no common ground within the government yet on how to achieve this.

Leading officials from the Treasury and Meloni’s office are open to exploring a deal that would involve KKR while giving Rome strategic control on the infrastructure, government sources have told Reuters, adding no final decision has been made.

In its preliminary bid, KKR has left the door open to a government-backed entity becoming a minority investor in the infrastructure with a stake of up 30% and some vetting powers on strategic issues, sources have previously said.

KKR, which has already spent 1.8 billion euros for a minority stake in TIM’s grid, submitted a non-binding bid for a controlling stake in a unit comprising TIM’s domestic fixed network and submarine cable business Sparkle.

The U.S. fund’s approach has valued the unit at some 20 billion euros, including debt and a 2 billion euro earn out mechanism, two sources familiar with the matter have said.

Ceding control of TIM’s landline grid is a main plank of TIM Chief Executive Pietro Labriola’s efforts to cut the former phone monopoly’s 25 billion euro net debt pile.

TIM reiterated its board of directors would meet on Feb. 24 to discuss KKR’s non-binding offer, although sources have previously said the directors would likely postpone a decision on KKR’s approach.

Shares in TIM fell 1% in early Wednesday trade, with broker Akros judging “on balance (as) negative” the intensifying political interference in the matter.

Equita analysts, however, saw as positive KKR’s “constructive” stance after TIM said the U.S. firm remained keen to keep discussions going. Reuters

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