(Bloomberg) — KKR & Co. plans to drop its 10.8 billion-euro ($11.9 billion) takeover proposal for Telecom Italia SpA if the troubled former phone monopoly doesn’t grant it the due diligence it requested since last November, according to people familiar with the matter.
In a letter expected on April 4, KKR is set to reiterate its interest in making a possible bid, the people said asking not to be identified because the matter isn’t public. The U.S. investment firm will make clear that it wants to review the phone carrier’s finances even more than before as market conditions have changed, the people added.
Russia’s invasion of Ukraine, and recent downgrades on Telecom Italia’s credit rating, are among these reasons, they said.
Spokespeople for KKR and Telecom Italia declined to comment.
The Single Network
Telecom Italia Chief Executive Officer Pietro Labriola is working on a plan that rivals KKR’s full takeover of Telecom Italia. Under that project, the landline assets would be merged with its smaller, state-backed rival Open Fiber SpA, aligning Telecom Italia with a government goal of building a single national fiber network while avoiding duplicate investments. It’s a process that could take several months and would need approval from European regulators, people familiar with the matter said in March.
Under the plan, state lender Cassa Depositi e Prestiti SpA, Telecom Italia’s second-largest investor, would get a majority stake in the company’s fixed network assets, people familiar with the matter said earlier this year. CDP is also the controlling shareholder of Open Fiber.
On Saturday, Telecom Italia confirmed in a statement it signed a non-disclosure agreement with CDP to start preliminary discussions on integrating its network with that of Open Fiber. This deal is also open to KKR and other funds, two other people familiar with the matter said.
Labriola has also a plan to separate all Telecom Italia’s commercial services into another unit called ServCo, according to Telecom Italia’s business plan.
Last month, CVC Capital Partners made a non-binding offer for 49% of Telecom Italia’s new enterprise services unit. Telecom Italia plans to discuss CVC’s non-binding bid in a board meeting scheduled for April 7 after the company’s annual general meeting, the people said.
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