Italy rebuffed a plan from an investor which challenged its strategy for Telecom Italia SpA and will stick to its plan to sell the carrier’s land-line network to US private equity giant KKR & Co.
The Italian government rejects any proposal that is different to its previously announced strategy, an official said in a statement on Saturday, reiterating that the government strategy is also aimed at retaining control of a strategic asset. Italy holds a stake of about 10% in Telecom Italia through state-backed lender Cassa Depositi e Prestiti SpA.
The government comments are in response to an alternative plan proposed by Merlyn Advisors Ltd, a minority investor in Telecom Italia, which would halt the land-line sale and replace Chief Executive Officer Pietro Labriola. That plan envisaged the carrier keeping the grid while selling its consumer division and its Brazilian unit Tim SA, according to a document seen by Bloomberg.
Read more: Telecom Italia Investor Seeks to Oust CEO, Halt Network Sale (1)
In a separate statement on Saturday, Telecom Italia said it had received the letter from Merlyn and will continue with preparatory activities related to KKR’s offer.
Giorgia Meloni’s government has backed the offer from KKR, saying it fulfills Italian government requirements. Under the terms of the proposed deal, Italy’s Finance Ministry will take up to a 20% stake in the grid unit.
US private equity giant KKR & Co. made a binding offer earlier this month that will be reviewed by Telecom Italia’s board at meetings next week. KKR valued the company’s landline grid at about €23 billion ($24.3 billion), including some earn-outs, people familiar with the matter have said.
The network sale is Labriola’s brainchild and would be a milestone for Telecom Italia as it seeks to slash about its gross debt of about €30 billion.
