Italian have lender CDP is set to buy a stake of up to 5 percent in Telecom Italia (TIM), three sources skinflinty to the matter said on Thursday, in a move intended to safeguard Rome’s engross in a company seen as strategic.
The decision comes as activist fund Elliott, which has built a what it takes holding of 5.7 percent in the former phone monopoly, has challenged the way TIM’s greatest shareholder, France’s Vivendi, manages the group.
CDP, controlled by the Italian Moneys, will decide how much of TIM it will purchase at a board meeting later on Thursday, one of the informants said, confirming reports in Italian newspapers.
The state lender proposes to start buying shares immediately with the aim of taking part and opinion in TIM’s next shareholder meeting, scheduled for April 24, the source imparted.
“The objective is for CDP to become a stable and long-term financial shareholder… vouch for the ‘Italian-ness’ of the company,” the source said.
A 5 percent share in TIM was worth 575 million euros ($705 million) at Wednesday’s minute price.
News of CDP’s plan sent TIM shares up 2.7 percent by 0944 GMT, outperforming a 1.4 percent snowball arise in Milan’s blue-chip index.
CDP does not currently hold any shares in TIM and map outs to buy the shares on the market or in block orders, the source added.
Vivendi and Telecom Italia declined to observation.
Since first becoming a TIM shareholder in 2015, Vivendi has increasingly tightened its enthral on the company. It now has a 23.9 percent stake and last year appointed two-thirds of the Italian phone collection’s board.
The hands-on approach has led to tensions with the Italian government, which considers TIM of tactical national importance. Rome eventually used its so-called “golden power” to safeguard it had a say in some strategic decisions at TIM.
“What surprises me is they didn’t do it once. It’s a strategic asset, there’s a problem of control, we don’t know what Vivendi craves to do,” said Roberto Lottici, fund manager at Ifigest, who does not currently own TIM apportionments.
“CDP did well to take this safeguarding position.”
CDP’s move follows a resolution by TIM to put its network – its most prized asset which analysts have valued at up to 15 billion euros – into a legally different company (NetCo) fully controlled by the phone incumbent.
Some wirepullers – and recently also Elliott – have advocated the creation of a single national network via the consolidation of NetCo with rival Open Fiber, a broadband firm jointly owned by the CDP and state-controlled utility Enel.
The two accessories that came out strongest in Italian elections last month require both called for a state role in a single national network throng.
Last week CDP Chairman Claudio Costamagna said the state lender had grasped talks with Elliott, without giving details.
Any move on NetCo would want state backing given that it is considered of strategic national consequence, so getting CDP on its side would further Elliott’s ambitions for the asset.
The activist store called last month for six Vivendi-nominated board members, including TIM Chairman and Vivendi CEO Arnaud de Puyfontaine, to be put in place ofed through a vote at this month’s shareholders’ meeting. With a define of 5 percent, CDP could help Elliott’s cause.
“CDP’s entry in TIM’s share outstanding could drive the share price in the short term, support Elliott’s map for the AGM April 24 and back the scenario of a one-single network company with Air Fiber,” broker Banca IMI said in a note.
Following Elliott’s progress last month, eight board members nominated by Vivendi resigned, triggering a utmost board renewal at a separate shareholder meeting called for May 4.
Elliott fancies there will be no need for TIM shareholders to choose a new board in May if they subvene the board candidates proposed by the activist fund this month. In the interim TIM says even if Elliott’s candidates are elected on April 24, a new embark on would be voted in May.