, which owns 24% of Telecom Italia’s ordinary stock, and paid on average 1 euro for each share. For CDP, which owns 10%, the average purchase price was probably close to 0.70 euros a share.
That means the U.S. buyout shop may have to pay more than the 10.8 billion euros currently on offer. But the competitive Italian telecom market and Telecom Italia’s debt pile, equivalent to around 3.5 times 2021 EBITDA as per Refinitiv data, means KKR can’t use too much extra borrowing to fund the deal. It helps that most of Telecom Italia’s bonds don’t have change of control clauses, meaning they don’t need to be refinanced when the deal closes.Assume KKR lifts its offer to 0.
, which could raise at least 1.5 billion euros, or trim its 67% stake in its Brazilian arm, worth about 3.6 billion euros. KKR, which is investing through its infrastructure fund, may in the end opt not to use so much debt. Either way, the group does have some wiggle room to pay more.- KKR is considering boosting its 10.8 billion euro offer for Telecom Italia to win over top investor Vivendi, Bloomberg reported on Nov. 23.
- The U.S. buyout firm has offered to pay 0.505 euros per share for the Italian telecom group, valuing it at about 33 billion euros including debt. If successful, it would be the largest private equity-backed buyout deal in Europe, according to Refinitiv data.Register now for FREE unlimited access to reuters.comReuters Breakingviews is the world's leading source of agenda-setting financial insight.
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