Private equity giants KKR, CVC in talks over Telecom Italia

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Private equity giants KKR, CVC in talks over Telecom Italia

The private equity giants KKR Co. and CVC Capital Partners are considering a bid for Telecom Italia SpA, a move that would help share the financial burden for Europe's biggest-ever leveraged buyout, people with knowledge of the matter said.

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Two investment firms have held exploratory talks about the potential for a joint offer, according to the people who asked not to be identified because the information is confidential.

Since the start of the epidemic, KKR has been one of the most active dealmakers in the world. Club deals - where multiple buyout firms partner on an acquisition are becoming more popular amid a scarcity of potential targets and a desire to hunt ever-larger prey.

According to the people, CVC has been studying a possible acquisition of Telecom Italia for several months. The people said that private equity firms are still debating the merits of teaming up, and there is no certainty that they will proceed with a joint offer. The people said that CVC is an equal partner to joining as a minority investor.

Advent International, which had been in talks about partnering with CVC, has cooled off due to the complexity of the transaction and the Italian government s perceived support for the KKR bid, the people said.

Representatives for Advent, CVC and KKR didn't want to make a statement. Telecom Italia's press office didn't respond immediately to emailed queries.

The U.S. suitor has been considering how much money it would need to raise its bid to win over reticent investors, Bloomberg News reported Tuesday.

Telecom Italia Chief Executive Officer Luigi Gubitosi urged the company s board to take swift action on KKR's bid. A takeover of the company would rank as Europe's biggest private equity buyout, according to data compiled by Bloomberg.

The people said that while KKR is studying whether to bring in a partner, the firm s focus remains on its existing proposal. It has the ability to finance the offer on its own and could also rope in some of its limited partners as co-investors, according to the people.

A 21.3 billion-euro fundraising for its latest flagship fund was completed last year by CVC, one of the world's largest private equity firms. The investments in Italy have included financial services firm Cerved Group SpA and the drugmaker Recordati SpA.

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