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State-lender Cassa Depositi e Prestiti SpA (CDP) will reportedly withdraw its bid for ownership of TIM’s network infrastructure unit, leaving the path unopposed for private equity fund KKR
This week, anonymous sources speaking to Bloomberg suggest that CDP is preparing to drop its multi-billion euro bid for TIM’s fibre network.
According to the sources, CDP is unwilling to increase its offer to exceed that of rival bidder KKR, but still remains interested in taking a minority stake in the business, either alone or in partnership.
TIM has been considering spinning off its network infrastructure unit ever since new CEO Pietro Labriola took over the role in January. The move would come as part of a major restructure that would see the company split off its network and service arms into separate businesses, potentially opening them up to external investors.
This news quickly drew the attention of private equity firm KKR, a company that had already demonstrated a significant appetite for TIM’s assets, having presented the company with a rejected takeover offer back in 2021. The private equity firm already owns a 37.5% stake in TIM’s ‘last mile’ network, Fibercop.
As such, KKR first approached TIM with a non-binding offer for a stake in the NetCo in February this year for an undisclosed sum.
However, KKR was not the only potential investor for the nascent NetCo. Within a month of KKR’s offer, state bank CDP announced that it had formed a partnership with Australia’s Macquarie Asset Management to present a counterbid for a stake in the emergent business unit.
This bid was felt to be more likely to appease the new Italian government under Georgia Meloni, which had previous said that the nation’s critical infrastructure should be under state control.
The Italian government has so-called Golden Power rights, which allows it to veto investments from foreign companies in sectors of strategic importance, including defense, energy, and telecoms.
The two competing bids led TIM announce a formal auction for the infrastructure unit and invite the two parties to improve their bids. At the time, TIM described the bids as ‘not yet adequate’.
According to Bloomberg’s sources, CDP’s initial bid valued the NetCo at €19.3 billion, a figure which has since been eclipsed by an increased bid from KKR at €21 billion.
This new bid from KKR includes debt and €2 billion in a performance-based ‘earn-out’, allowing KKR to recoup some of its initial investment if certain financial goals are reached.
It would appear, however, that CDP is unwilling to revise their offer to exceed this latest bid, leaving KKR unchallenged in its approach.
Final bids for the network are expected to take place by June 9.
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