Purchases on Tim after Mef's bid for Sparkle

(Il Sole 24 Ore Radiocor) - A day of acquisitions for Telecom Italia, which from the early stages of the session has been at the top of the FTSE MIB. Boosting the share price was the news that Mef and Kkr presented an offer for 100% of Sparkle on the evening of Wednesday 31 January. The press release issued by the Pietro Labriola-led company states that the offer includes the possibility to negotiate adjustments to contractual terms should Tim decide to maintain a minority stake in Sparkle for a certain period of time, supporting the implementation of the business plan. The offer will be valid for 15 days and will be considered at a board meeting scheduled for seven February.

From an economic point of view, the expectations, according to press reports, are for a price similar to or slightly higher than the previous offer: there was talk of an enterprice value (equity plus debt) of around 600 million plus a possible earn-out to reach 750 million. According to Equita, the fact that Tim 'can maintain a minority pro-tempore would make sense and could help the final phase of negotiations. We - say the analysts - incorporate a value of 750 million that comes from the press indications including the earn-out. The Sparkle deal has a limited impact on the group's deleverage (0.1 times) and the group's implied post-sale multiple (essentially unchanged)'.

Moreover, with regard to Vodafone's decision to reject Iliad's offer and continue negotiations with other counterparties, Equita believes 'that this creates more direct speculative appeal on Tim (or Tim consumer) while reducing in the short term the impact of a potential indirect benefit from market repair resulting from the consolidation of Iliad and Vodafone in Italy, an impact that we see as much more limited in the case of a Fastweb-Vodafone combination'.