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The board of Telecom Italia (BIT:) (TIM) has given the green light to a binding takeover bid by global investment firm KKR, with the transaction anticipated to be finalized by summer 2024, subject to EU antitrust approval. The decision was made via a majority vote, according to reports from Sunday.
In addition to the takeover, the deal will result in significant changes in TIM’s shareholder structure and financial status. As reported by Corriere della Sera, the Italian finance ministry is set to become a major shareholder in TIM, acquiring an approximate 20% stake as part of the agreement with KKR.
This arrangement is expected to significantly alleviate TIM’s financial burden. According to Milan daily, it will facilitate a debt reduction of nearly half of TIM’s over €30 billion ($34.1 billion) debt. The deal also foresees a workforce downsizing, although specific details were not provided.
The KKR deal places a valuation on NetCo, TIM’s fixed network assets excluding its undersea cable division Sparkle, at €18.8 billion ($21.4 billion). Notably, a non-binding proposal for Sparkle was rejected by TIM’s board.
The conclusion of this deal is contingent upon receiving approval from the EU antitrust authorities. Until such approval is granted and the transaction is completed, the specifics of the deal could potentially undergo changes.
InvestingPro Insights
With the recent approval of a binding takeover bid by KKR for Telecom Italia (TIM), it’s crucial to understand the current financial standing of TIM. According to InvestingPro’s real-time data, TIM has a market capitalization of $5940.38M. Despite a negative P/E ratio of -1.70, the company’s revenue growth in Q2 2023 was 4.87%, with a gross profit margin of 48.52%.
InvestingPro Tips suggest that TIM operates with a significant debt burden, which aligns with the reported debt reduction plan in the KKR deal. The company is also trading at a low price/book multiple, suggesting an undervalued stock. However, the company is not profitable over the last twelve months, as indicated by a negative EPS of -0.17 USD in Q2 2023.
For investors and stakeholders, these insights can provide a clearer understanding of TIM’s financial health and future prospects. With over 10 additional tips available on InvestingPro, you can gain a comprehensive view of the company’s performance and potential risks.
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