European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>KKR intends to offer €0.505/ordinary&amp;savings, a 44% premium and 5.2x EV/Fwd EBITDA. KKR is willing to split Telecom Italia, by separating the network (Infra Co) from the services (ServiceCo).</li>
<li>The attempt would need 67% of the ords float tendered and no interference from the Italian Government. The market is cautious, but believes this time can happen.</li>
<li>In light of the possible offer, I change my recommendation to <strong>long TIT IM</strong>, <strong>long TITR IM</strong>, <strong>TP 0.505/share</strong>. Gross spread is 10.5%. The premium savings/ordinary shares has decreased to 0.9%.</li>
</ul>


KKR intends to offer €0.505/ordinary&amp;savings, a 44% premium and 5.2x EV/Fwd EBITDA. KKR is willing to split Telecom Italia, by separating the network (Infra Co) from the services (ServiceCo).
The attempt would need 67% of the ords float tendered and no interference from the Italian Government. The market is cautious, but believes this time can happen.
In light of the possible offer, I change my recommendation to long TIT IM, long TITR IM, TP 0.505/share. Gross spread is 10.5%. The premium savings/ordinary shares has decreased to 0.9%.


KKR Potential Offer for The (W)Hole of Telecom Italia

Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

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Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

<p>Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.</p>In this Insight:<ol><li><a href='/entities/tata-motors-ltd' target='_blank' rel='noopener'>Tata Motors Ltd</a></li><li><a href='/entities/anton-oilfield-services-gp' target='_blank' rel='noopener'>Anton Oilfield</a></li><li><a href='/entities/china-south-city-holdings' target='_blank' rel='noopener'>China South City</a></li><li><a href='/entities/panda-green-energy-group-ltd' target='_blank' rel='noopener'>Panda Green</a></li><li><a href='/entities/gcl-new-energy-holdings-ltd' target='_blank' rel='noopener'>Gcl New Energy Holdings</a></li></ol>and more...

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and also showcase a list of the most-read reports.In this Insight:Tata Motors LtdAnton OilfieldChina South CityPanda GreenGcl New Energy Holdingsand more...

<ul>
<li>
<strong>Spreads have generally tightened</strong> across our liquid universe, with some notorious exceptions such as Volkswagen and Grifols.</li>
<li>Recommendations<strong> long ords / short prefs</strong>: Henkel, Fuchs Petrolub, Telecom Italia, Grifols, Handelsbanken, Investor AB.</li>
<li>Recommendations<strong> long prefs / short ords</strong>: BMW, Volkswagen, Roche, Schroders.</li>
</ul>



Spreads have generally tightened across our liquid universe, with some notorious exceptions such as Volkswagen and Grifols.
Recommendations long ords / short prefs: Henkel, Fuchs Petrolub, Telecom Italia, Grifols, Handelsbanken, Investor AB.
Recommendations long prefs / short ords: BMW, Volkswagen, Roche, Schroders.


Liquid Universe of European Ordinary and Preferred Shares: November Report

<ul>
<li>KKR is looking at alternatives ranging from raising its stake in Telecom Italia’s grid operations to pursuing a full takeover of the unit, as an alternative to the merger of FiberCop (the crown jewel) with Open Fiber, by which Telecom Italia would own a minority stake in the merged entity.</li>
<li>The merger seems designed to facilitate the generation of cash (by partial disposal and/or enhancing the share price by focusing analysts’ attention on its SOTP). Ongoing restructuring has created uncertainty in Telecom Italia’s intentions and potential actions, which in turn will introduce increased volatility into the pricing of Telecom Italia equity and debt. Vivendi, sitting on a 67% paper loss, is (rightly in my view) concerned.</li>
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<p>I would look to put on any the following strategies: short credit/buy protection, short TIT IM (my SOTP valuation is €0.29/ordinary share), and long savings/short ords.</p>
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</ul>


KKR is looking at alternatives ranging from raising its stake in Telecom Italia’s grid operations to pursuing a full takeover of the unit, as an alternative to the merger of FiberCop (the crown jewel) with Open Fiber, by which Telecom Italia would own a minority stake in the merged entity.
The merger seems designed to facilitate the generation of cash (by partial disposal and/or enhancing the share price by focusing analysts’ attention on its SOTP). Ongoing restructuring has created uncertainty in Telecom Italia’s intentions and potential actions, which in turn will introduce increased volatility into the pricing of Telecom Italia equity and debt. Vivendi, sitting on a 67% paper loss, is (rightly in my view) concerned.






I would look to put on any the following strategies: short credit/buy protection, short TIT IM (my SOTP valuation is €0.29/ordinary share), and long savings/short ords.











KKR/Telecom Italia: Open Fiber Deal, Ongoing Restructuring, Strategies

<p><br/> The Europe HY Trade Book for October 2021 includes high-conviction trade ideas drawn from our European HY coverage universe, along with relative-value scatter plots and tables by industry.<br/></p>

  The Europe HY Trade Book for October 2021 includes high-conviction trade ideas drawn from our European HY coverage universe, along with relative-value scatter plots and tables by industry. 

Europe HY Trade Book - October 2021 - Lucror Analytics

Italy

Telecom Italia S.p.A., through subsidiaries, offers fixed line and mobile telephone and data transmission services in Italy and abroad.  The Company offers local and long-distance telephone, satellite communications, Internet access, and teleconferencing services.

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Telecom Italia SPA (TIT IM)

KKR Potential Offer for The (W)Hole of Telecom Italia

In light of the possible offer, I change my recommendation to Long TIT IM, long TITR IM, TP 0.505/share. Additional upside could come from a...

Jesus Rodriguez Aguilar

Weekly Wrap - 21 Nov 2021

Lucror Analytics Weekly Wraps provide an overview of all Morning Views comments and reports published by our analyst team in the past week, and...

Lucror Analytics

Liquid Universe of European Ordinary and Preferred Shares: November Report

Spreads have generally tightened across our liquid universe, with some notorious exceptions such as Volkswagen and Grifols.

Jesus Rodriguez Aguilar

KKR/Telecom Italia: Open Fiber Deal, Ongoing Restructuring, Strategies

I would look to put on any the following strategies: short credit/buy protection, short TIT IM (my SOTP valuation is €0.29/ordinary share), and...

Jesus Rodriguez Aguilar

Europe HY Trade Book - October 2021 - Lucror Analytics

The Europe HY Trade Book for October 2021 includes high-conviction trade ideas drawn from our European HY coverage universe, along with...

Lucror Analytics

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