Telecom Italia’s biggest shareholders have resumed negotiations over their six-year investor agreement that can be revoked this month, according to people familiar with the matter.
Telefonica SA, Assicurazioni Generali SpA, Intesa Sanpaolo SpA and Mediobanca SpA together hold 22.4 percent of Milan-based Telecom Italia through Telco SpA. Telefonica is in talks to increase its stake in Telco to 70 percent from 46 percent, with the financial investors lowering their holdings to 30 percent, said two of the people, who asked not to be identified because the deliberations are confidential.
At today’s closing price, the additional Telecom Italia stake that Telefonica is seeking has a market value of about 580 million euros ($782 million). The discussions are at an advanced stage, though no final accord has been reached, said one of the people. The shareholders, who failed to agree on a price last week, will continue to negotiate this evening and Telco may make a statement tomorrow, the person said.
Telefonica is also seeking to extend Telco’s exit window by another six months as a way to gain time and prepare the potential sale of Telecom Italia’s Brazilian unit Tim Participacoes SA to strengthen the Italian carrier’s balance sheet, people familiar with the matter have said. Italian investors are willing to grant the extension if Telefonica signs a preliminary agreement this week for the purchase of their shares, according to one of the people.
Telecom Italia shares rose 3.4 percent to 59 cents today, valuing the phone company at 10.8 billion euros.
Representatives for Telefonica, Intesa, Mediobanca and Telecom Italia declined to comment on the talks. A spokesman for Generali couldn’t immediately be reached for comment.
Intesa’s management board is scheduled to gather today to discuss its holding in Telco, said one of the people.
Telefonica and the financial investors agreed in 2007 to pay 4.1 billion euros for an 18 percent stake in Telecom Italia in what was a compromise by the government to keep the carrier Italian and fend off a takeover bid by AT&T Inc. and Carlos Slim’s America Movil SAB.
Telco’s owners have written down their investments at least five times as Telecom Italia shares slumped more than 70 percent over six years. Mediobanca last week wrote down the value of its Telecom Italia shares to 53 euro cents each from 1.2 euros, while other investors in Telco hold stock at 1.2 euros apiece.
The investor pact can be dissolved by the end of this week, or else it will be extended through February 2015 with another exit window in August 2014.