Telecom Italia shares jumped more than 27% on Monday morning in Europe after U.S. private equity giant KKR (NYSE:KRR) launched a 10.8-billion-euro ($12-billion U.S. ) buyout bid for Italy’s largest phone company.
The non-binding proposal values the former phone monopoly at 0.505 euros per share in cash, indicating a 45.7% premium on Friday’s closing share price, and rises to more than 33 billion euros including debt.
Telecom Italia’s reported gross debt exceeds 29 billion euros, and S&P last week downgraded the company’s credit rating further below investment grade level. The buyout offer is reportedly closer to 33 billion euros in total with the debt factored in.
The French media titan has long been at loggerheads with U.S. activist hedge fund Elliott Management, a tussle which led to the ousting of Gubitosi’s predecessor, Amos Genish, in November 2018.
Prior to the start of trading on Monday, the embattled phone company had seen its share price fall almost 50% over the past five years.
Italy’s Treasury said foreign interest in Italian companies is "good news for the country."
The Telecom Italia board, chaired by former Bank of Italy Deputy Governor Salvatore Rossi, met on Sunday to discuss the offer, which was characterized by KKR as “friendly,” according to a statement published Monday.
KKR has been busy in other areas, too, announcing an $820-million U.S. deal with Apache Capital, an investment manager focused on U.K. residential real estate, form a joint venture to form a U.K. build-to-rent multifamily housing investment platform, the companies said in a statement.
KKR shares picked up 54 cents soon after Monday’s opening bell to $78.85.
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