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Telecom Italia’s chief offers to resign after KKR’s takeover offer

Telecom Italia is approaching its sixth reform in less than nine years after Luigi Gubitosi offered to resign as Chief Executive Officer prior to the extraordinary board meeting scheduled for Friday afternoon.

Pietro Labriola, head of the Brazilian division of Telecom Italia, was urged to succeed Gubitoshi, according to the three people who attended the meeting. However, board members and others close to the discussions in Paris and Rome have predicted that this week’s informal internal discussions may be “especially hot” and may be a last-minute surprise. increase.

According to the public, the Italian Treasury, which manages a 10% stake in the company through state-sponsored investor Cassa Deposition e Prestiti, also has a say in the management review. It is said that there is.

Telecom Italia did not respond to the request for comment. The group’s largest shareholder, Vivendi, and Italian authorities declined to comment.However, Giancarlo Giorgetti, Minister of Economic Development, said this week, “The Italian government is [influence the board’s] Administrative decision “.

Vivendi, a French conglomerate with a 24% stake in Telecom Italia, has previously shown that Gubitosi is responsible for the company’s poor performance and has begun to instigate management changes. Several other board members have called on Friday to discuss the future of the CEO, according to people familiar with the board discussions.

However, attention shifted after KKR last Sunday. Non-binding € 33 billion offer Keep Telecom Italia private.

The US buyout fund provided cash of € 0.505 per share. This is a 45% premium on last Friday’s closing price, bringing a share value of € 10.7 billion. It has a net liability of approximately € 22.5 billion.

If successful, the deal will be the largest private equity acquisition in European company history.

However, according to analysts, Vivendi believes that the price offered by KKR is about half the average paid to build a stake in 2016.

According to some people who attended the talks, the French conglomerate also believes that a US buyout fund offer was launched behind them with the help of Gubitoshi.

KKR has already worked closely with Gubitosi after acquiring a 37.5% stake in FiberCop, Telecom Italia’s “last mile” network. For 1.8 billion euros last year.

Vivendi and KKR were strongly rejected by Telecom Italia, but declined to comment on the proposal.

Telecom Italia has several other issues this year. I issued two profit warnings in three months. Complex merger plan It seemed to be stranded with rival Open Fiber, and the Serie A broadcast rights deal with UK platform DAZN wasn’t as profitable as planned.

Telecom Italia’s share price has fallen almost 40% since Gubitosi took charge in November 2018 and mid-month.

According to some people near the CEO, Gubitoshi chose to probably anticipate a distrust resolution by offering to resign. In a letter to board members Thursday evening, Gubitoshi said he would like to facilitate the choice of advisors by meeting with KKR, initiating the due diligence process, and resigning. ..

The ability to proceed with buyout transactions at this point also depends on the Italian government, which has the right to veto the overseas acquisition of strategic assets.

Prime Minister Mario Draghi said at a news conference this week that the government’s priority is to protect Italy’s employment, technology and networks. He set up a working group of ministers to consider Telecom Italia’s options.

Separately, in a statement to the press on Thursday night, a Draghi spokesperson denied that the Prime Minister had shed light on potential KKR deals.

Telecom Italia’s chief offers to resign after KKR’s takeover offer

Source link Telecom Italia’s chief offers to resign after KKR’s takeover offer

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