Vivendi reacts with fury to TIM network sale to KKR

Source: Vivendi

Vivendi has reacted furiously to Telecom Italia’s (TIM) board’s decision to accept an offer from private equity outfit KKR for TIM’s Italian fixed network.

In a strongly worded statement, Vivendi, a major shareholder in the Italian telco, said that “shareholders’ rights have been trampled on” by a deal was approved without informing and requesting a vote by shareholders.

The French media giant said that its “reasoned requests” to the TIM board, TIM’s statutory auditors and market regulator Consob had been “completely ignored”.

Vivendi said it would take legal action to prevent a sale it believes to be illegal.

The company said that five pro veritate opinions have confirmed that the sale of Telecom Italia’s entire infrastructure network entailed a change in TIM’s corporate purpose that would have necessitated a prior amendment of the company’s bylaws, and hence approval by shareholders.

It also accused TIM’s board of failing to apply provisions on material related-party transactions. The related party in this case, according to Vivendi, is Cassa Depositi e Prestiti, controlled by the Italian ministry of economy and finance.

Vivendi’s move comes as TIM’s board approved KKR’s offer to acquire its fixed network by 11 votes to 3.

Under the terms of the deal, TIM will contribute a business unit consisting of primary network activities, wholesale activities and the entire equity investment in the subsidiary Telenergia – into FiberCop, a company that already manages activities relating to the secondary fibre and copper network, and the simultaneous acquisition by Optics BidCo (a vehicle controlled by KKR) of TIM’s entire equity investment in FiberCop.

The deal excludes Sparkle, where the board ruled that the KKR bid was insufficient.

TIM said that the board had voted by the same margin, on the basis of opinions received, that it had exclusive competence to approve the transaction, and mandated its CEO to sign.

KKR’s offer gives NetCo excluding Sparkle an enterprise value of €18.8 billion, while the potential transfer of part of NetCo’s debt and earn-outs could up that to €22 billion.

TIM said it expected the deal to close in the summer of next year.