Reports have recently emerged that the joint bid by Cassa Depositi e Prestiti (CDP) and Macquarie Asset Management for TIM’s network assets, known as NetCo, has been withdrawn. According to unnamed sources cited by Bloomberg, the CDP/Macquarie consortium has not only declined TIM’s request to increase its offer but has also stepped back from the non-binding bid it previously submitted. If this proves to be true, private equity firm KKR would be the only remaining bidder for the assets.
While it may seem like the end of the bidding war, the saga is far from over. KKR might be the frontrunner, but this does not mean it will offer enough to satisfy Vivendi, TIM’s major shareholder who has been pushing for more money, as well as its huge debt pile. The situation could be further complicated by concerns over antitrust issues, which might have played a part in the CDP/Macquarie decision to withdraw.
TIM has not made any formal comments on these recent developments. The company had given both sets of bidders until June 9th to submit new, increased offers, so it might be unclear how things will play out until then. Sources also stated that CDP could still be involved in a future network deal, possibly buying alongside other Italian investors to satisfy the government’s desire to keep the company’s network assets in state hands.
However, uncertainty remains as to whether KKR will meet Vivendi’s valuation of the NetCo assets. As of now, KKR’s €21 billion bid is still far off from Vivendi’s reported valuation of €31 billion and potential reduction to a minimum of €26 billion. If KKR truly wants to acquire the NetCo business, they may need to compromise with Vivendi to reach a middle ground on valuation. Otherwise, TIM has made it clear it could walk away from the process altogether if the financials do not add up.
Despite no final decision being made yet, CDP/Macquarie’s plans could still change. Nonetheless, it shows that the road to securing a deal for TIM’s NetCo assets remains a long and uncertain one.
