TIM Group Approves KKR Offer To Buy NetCo For Up To EUR 22 Bln; Gets Offer For Stake In Sparkle

(RTTNews) - Telecom Italia SpA or TIM Group (TIAOF.PK), an Italian telecom major, said on Monday that it has approved a proposal from Kohlberg Kravis Roberts & Co. L.P. or (KKR) to acquire TIM's fixed network assets or NetCo, including FiberCop, by a company, Optics BidCo, controlled by KKR.

In addition, the TIM said that it has received a non-binding offer for its entire stake in Sparkle.

The binding offer values NetCo, excluding Sparkle, at an enterprise value of 18.8 billion euros. However, the earn-outs linked to the occurrence of certain conditions that may raise the value up to 22 billion euros. The transaction is expected to conclude by the summer 2024.

The earn-outs will be based on the completion, during 30 months following the date of closing, of potential consolidation transaction involving NetCo and the possible introduction of regulatory changes capable of generating benefits to NetCo, which could result in the payment in favor of TIM of an amount of up to 2.5 billion euros. In addition, it is also based-upon the introduction and entry into force by December 31, 2025, of sector incentives which could result in the payment in favor of TIM of an amount of up to 400 million euros.

The transaction implements the delayering plan launched in 2022 by TIM with an aim to overcome its vertical integration by separating its fixed network infrastructure assets from the services that TIM will continue to provide to its retail customers.

This will allow the Group to reduce its financial debt by around 14 billion euros at the time of closing.

With regard for the non-binding offer on Sparkle, the Board considered it unsatisfactory and mandated the CEO to verify the possibility of receiving a binding offer at a higher value once the due diligence is completed, the deadline for which has been extended to December 5.