(Bloomberg) —
Italy will review U.S. private equity giant KKR & Co.’s bid for Telecom Italia SpA and ensure strategic assets remain under state control.
The government will weigh whether to use Golden Power oversight for approaches by foreign companies, Economic Development Minister Giancarlo Giorgetti told lawmakers at a parliamentary hearing in Rome on Thursday.
Prime Minister Mario Draghi’s government has generally welcomed KKR’s interest, with the finance ministry saying in a statement such moves are “good news for the country.” But unions and politicians have been raising the alarm over a potential breakup of the company and on the risk of job cuts.
“Telecom has strategic assets for which state control is indispensable,” Giorgetti said. “The government will evaluate KKR’s bid within this context.”
Telecom Italia’s network, cybersecurity unit Telsy SpA and submarine cable unit Telecom Italia Sparkle SpA are among the assets that may be deemed strategic.
Telecom Italia shares fell as much as 3.7% following Giorgetti’s comments, before paring loses to trade down 1.3% at 3:40 p.m. in Milan.
Record Bid
While Italy has in the past blocked corporate moves on assets deemed strategic, Draghi has said he doesn’t oppose deals where the market has the ultimate say. The so-called Golden Power gives the government the right to stop deals or impose conditions on them if assets deemed to be strategic are involved.
KKR announced its 10.8 billion-euro ($12.2 billion) bid for Telecom Italia last month and the deal, if successful, would rank as one of the biggest transactions in the telecommunications industry this year. It would also be among the largest purchases ever in the European sector by a private equity firm.
KKR is interested in Telecom Italia’s fixed-line network, which the former monopoly has gradually upgraded from copper to high-speed fiber.
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