The bid by private equity firm KKR to acquire Italian telco group TIM has brought is boardroom battle of wills to a fresh crescendo.
Since the bid was announced at the start of this week, 24% shareholder and board contrarian Vivendi has repeatedly stressed it doesn’t want to sell. This once more creates the paradox of a minority shareholder being able to dictate the strategy of a company without going to the trouble and expense of acquiring the majority of it. What if the rest of the shareholders do want to sell to KKR?
Now, according to Reuters’ sources, TIM CEO Luigi Gubitosi has written to the TIM board, offering to step down if that would help speed up a decision on the takeover. It’s not immediately obvious why that would help, until you dig further into the whole TIM boardroom soap opera. Gubitosi’s appointment three years ago coincided with Vivendi losing its battle for control of the TIM board to activist investor Elliott, after which it lapsed into a sullen silence.
Over time this silence became punctuated by moans about the strategic direction Gubitosi was taking the company in, which seem to have been vindicated by recent profit warnings and the apparent error of doing a BT and going big on football content. In the light of all that it’s fair to assume that Vivendi wouldn’t shed any tears if Gubitosi cleared off, but it’s still not clear why him leaving would help the KKR acquisition process.
If Vivendi sold then it would no longer matter to it who was in charge and if Gubitosi was replaced it seems likely that would make TIM a more appealing investment to stick with. There’s nothing in the excepts of Gubitosi’s letter published by Reuters that sheds additional light on the matter either, other than an apparent by him to pressure Vivendi into action. The tragedy of all this is that the spike in TIM’s share price that followed the KKR bid is the first good news investors have had for years.