Colombo & Associati advised the Italian Ministry of Economy and Finance in the acquisition of a stake in TIM’s fixed-line network assets from TIM alongside with KKR. The binding offer values NetCo (excluding Sparkle) at an Enterprise Value of Euro 18.8 billion, without considering any upsides associated to the potential transfer of part of the debt to NetCo and to earn-outs linked to the occurrence of certain conditions that may increase the value up to Euro 22 billion. In detail, following the Board approval, it will be signed a transaction agreement governing:
• the contribution by TIM of a business unit – consisting of primary network activities, wholesale activities and the entire equity investment in the subsidiary Telenergia – into FiberCop, a company that already manages activities relating to the secondary fibre and copper network;
• the simultaneous acquisition by Optics BidCo (as mentioned, a vehicle controlled by KKR) of TIM’s entire equity investment in FiberCop, following the aforementioned contribution (FiberCop after the contribution “NetCo”).
In detail, the offer assumes that the closing will occur by the summer 2024 and foresees that the price of the business unit to be contributed to FiberCop will be subject to adjustments (customary for this kind of transactions) at closing in relation to certain predefined parameters and targets, such as, inter alia, the cash and debt transferred, the level of working capital, the cost recorded in the last 12 months of the transferred employees and the fulfilment of certain targets related to investments and fiber network deployment.
Thanks to the transaction, TIM, in addition to reducing debt and freeing up resources, will have the opportunity to operate in the domestic market benefitting from the reduction of a number of regulatory constraints and will also contribute to mantain the strategic flexibility envisaged in the delayering plan.
The transaction deal has been awarded as Deal of the Year 2023 in the Italian Finance Community.