KKR buyout offer sends Telecom Italia shares surging 22%

Telecom Italia shares jumped more than 22% on Monday morning after U.S. private equity giant KKR launched a 10.8 billion euro ($12 billion) buyout bid for Italy’s largest phone company.

The non-binding proposal values the former phone monopoly at 0.505 euros per share in cash, indicating a 45.7% premium on Friday’s closing share price, and rises to more than 33 billion euros including debt.

Telecom Italia’s reported gross debt exceeds 29 billion euros, and S&P last week downgraded the company’s credit rating further below investment grade level. The buyout offer is reportedly closer to 33 billion euros in total with the debt factored in.

Telecom Italia CEO Luigi Gubitosi has been under pressure from top investor Vivendi after two profit warnings in a single quarter.

The French media titan has long been at loggerheads with U.S. activist hedge fund Elliott Management, a tussle which led to the ousting of Gubitosi’s predecessor, Amos Genish, in November 2018.

Prior to the start of trading on Monday, the embattled phone company had seen its share price fall almost 50% over the past five years.

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