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Tim, this is how the Merlyn fund plays footsie with CDP and Vivendi on the internet but the government says no

Tim, this is how the Merlyn fund plays footsie with CDP and Vivendi on the internet but the government says no

All the details of the Merlyn fund plan on Tim's network which is an alternative to that of the Americans of Kkr. And the government's pro-KKR response. Facts, numbers, names, rumors and scenarios

Fund war on Tim: Merlyn vs. Kkr.

Here are facts, numbers, names, rumors and scenarios.

“We want a publicly-led national network like Terna, because this will create great value for everyone. We don't want it to be owned by a foreign fund. Our plan, which involves selling Tim Brasil and the consumer division, creates value for everyone, that of Kkr creates value only for Kkr".

This is what Alessandro Barnaba, founder of the Merlyn activist fund, shareholder of Tim with just under 3%, said about the alternative plan for Tim presented by the Americans from KKR.

Therefore, in the game of the sale of Tim's network, an alternative proposal to the transfer operation planned by the American fund Kkr arrives, surprisingly and on the wire (one week before Tim's board of directors meeting on 3 and 5 November).

MERLYN'S PROJECT FOR TIM

In essence, Merlyn envisages the creation of TechCo, a company in which all infrastructure activities can be brought together: network, cloud, business services and in the future a part of the competitor Open Fiber, currently controlled by Cdp and Macquarie. TechCo would then become the new TIM, listed and owned by CDP, Vivendi and, in this case, KKR and Macquarie.

WHO IS THE MERLYN FUND

The move is Merlyn Partners SCSp. The Luxembourg investment fund, managed by Merlyn Advisors Ltd., represents a group of Tim shareholders holding ordinary shares below the 3% threshold.

SIRAGUSA AGAINST LABRIOLA

Behind this operation is the founder of Merlyn, Alessandro Barnaba, but also Stefano Siragusa (in the photo), former deputy general manager of Tim, who left the telephone company in the summer of last year and author about 5 years ago of a plan on network very similar to the one now presented by the Merlyn fund . Siragusa, according to Il Sole 24 Ore , “is the mind who drew up the industrial plan for the relaunch of the company, a totally alternative to that of the CEO Pietro Labriola. It is no coincidence that in the letter sent to the Board of Directors there is an invitation to the board to remove the CEO Labriola and to take the necessary actions to co-opt Stefano Siragusa «and appoint him as CEO to guide the Company in the execution of the Plan»”.

THE SCENARIO FOR TIM STOCK ACCORDING TO THE MERLYN FUND

With the plan, according to Merlyn, Tim's stock – it is written – could reach "over 1 euro within the next 24 months". This is also what we read on the website built ad hoc and online since yesterday for Timvalue".

MERLYN'S PLAN IN DETAIL

Barnaba and Siragusa's plan starts from the creation of a new reality within Tim: TechCo with the enterprise part, Olivetti, Telsy, Noovle and the related infrastructures such as data centers and PSN (cloud) contracts. “A new TIM, in short, with strategic leverage in its infrastructure and which focuses exclusively on non-regulated services. By acting as a wholesale supplier and moving only on the business segment (exiting retail) and on the offer of non-regulated services, TechCo has the ambition of positioning itself as a market aggregator", underlines Il Sole 24 Ore .

THE WORDS OF BARNABA OF THE MERLYN FUND

«All stakeholders agree that there is a lot of value in Tim – Barnaba told the newspaper Repubblica – The difference is that they want to spin off the network to benefit from it when they resell it. Instead, we want the value that will be created over time on the network to be shared with all shareholders for the benefit of the country, its employees and related industries. Our plan, which involves selling Tim Brasil and the consumer division, creates value for everyone, that of Kkr creates value only for Kkr".

For Tim, selling the network is the only way to reduce the debt, but how can the problem be solved? The founder of the Merlyn fund responded: «A story has been told that the market has never believed, as demonstrated by the performance of the stock since the announcement of the sale of the network. A story of pure financial alchemy. Now there is another plan that will make Tim an infrastructure player in the country's interest. TechCo will be an Italian company with global ambitions, focused on offering regulated services and cutting-edge technological solutions, leveraging its infrastructure and know-how. It will focus only on business customers, where it will act as a pure wholesaler. The future in telecommunications is in the hands of those who have the infrastructure, not those who rent it from third parties."

MERLYN PLAY FOOTBALL TO CDP AND VIVENDI

Merlyn's project appears to have a "sovereignist" approach, therefore in (potential) harmony with the aspirations of the centre-right government. In this context, Cassa Depositi e Prestiti (controlled by the Ministry of Economy, to be put at the helm of a single network (combining the network assets of Tim and Open Fiber) would have a leading role. “The Merlyn fund in its the letter winks at CDP (9.81% shareholder of Tim) and the main shareholder Vivendi (23.75%), which so far has been critical of the opportunity to sell the network to KKR for 20 billion", he remarked the newspaper Repubblica . Merlyn's plan winks not only at Cdp, but also at the Macquarie fund: Merlyn's plan is essentially "the old idea of ​​the Macquarie fund which had come forward, unheeded. Kkr and Macquarie, a in turn, they will be called not to exit but to increase their weight, through the share in Open Fiber (for the Australian fund) and by contributing Fibercop in Telecom Italia (for the US fund)", noted Il Sole 24 Ore . And, according to Start Magazine , the French are studying the Luxembourg fund plan with interest.

THE GOVERNMENT REJECTS THE MERLYN PROJECT AND DEFENDS KKR'S PLAN

The Meloni government has already decided on Tim and will not change course, even in the face of a new proposal. “With reference to the so-called proposal that recently emerged on the future of Tim, the government points out that it has taken other decisions that contemplate another plan, made manifest to the Tim company and to the market with transparency and in the correct manner. Any other initiative is foreign to the Government's intentions,” executive sources tell news agencies.

There is already a public 'seal' on the TIM network, because KKR's offer includes the participation of the Mef with a strategic control role. “The initiative taken by the Government clearly provides for public control over the strategic structure as the final result expressly guaranteed by the proposal – the only proposal, sources close to the government underline – in which the Executive participates with the recognition of the strategic role and powers special recognitions granted to the Government, in full compliance with EU legislation".

In short, Merlyn's counter-proposal was needed to make the government exit, definitively and publicly, in a pro-KKR and in fact also pro-Labriola direction.

THE SCENARIO FOR TIM'S BOARD OF DIRECTORS

However, the move of Barnaba and Siragusa is another factor that will influence the decisions of the directors on the KKR plan. A factor that does not go in the direction of the American fund, according to the reconstructions closest to Vivendi and also to Merlyn. In fact, the councilors are already evaluating with concern the possible legal appeals by Vivendi in case the board of directors says yes to the KKR project without going through the shareholders' meeting as the French ask. Furthermore, all the board members – according to the reconstruction of Start Magazine – received unpleasant echoes of the talks between the Vivendi men and the Minister of Economy, Giancarlo Giorgetti, which paint dark omens about the current Tim summit. And in all this, Merlyn's alternative plan is now also inserted which could further raise a question in many councilors: given that we have a deadline, why do we have to say yes to Kkr? From the series: let's wash our hands… Will it really be like this? We will see.

HERE IS THE SIRAGUSA PLAN ON THE SINGLE NETWORK PRESENTED IN NOVEMBER 2018


This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/tim-merlyn-governo-cdp-vivendi-rete/ on Sat, 28 Oct 2023 09:34:47 +0000.