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Telecom Italia CEO Offers Resignation to Speed KKR Bid

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(Bloomberg) -- Telecom Italia SpA Chief Executive Officer Luigi Gubitosi said he’d be willing to resign to help move forward a takeover offer from KKR & Co which has been rejected by the former monopoly’s largest shareholder.

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In a letter to the board ahead of a crucial meeting Friday, Gubitosi said stepping aside could help speed the process, which has hit a snag following KKR’s 10.8 billion-euro ($12.2 billion) overture on Nov. 21. France’s Vivendi SE, Telecom Italia’s top shareholder with a 24% stake, has already signaled it views the offer as too low.

In the letter seen by Bloomberg News, Gubitosi urged the appointment of financial advisers to help the board grant KKR swift access to Telecom Italia’s books to evaluate its non-binding proposal. The U.S. company is already considering a higher offer to blunt Vivendi’s opposition, people familiar with KKR’s thinking said earlier.

Telecom Italia shares traded up as much as 2.8% in Milan, reversing an earlier decline of as much as 2.9% on a volatile day for markets.

Teaming Up?

To succeed, KKR needs to win over multiple stakeholders. Besides Vivendi, the Italian state owns a stake via its state-owned lender and the government has veto power. Earlier this month, KKR representatives met with government officials, who set conditions linked to Telecom Italia’s network, its main asset, which is deemed to be of strategic significance to the country.

Prime Minister Mario Draghi hasn’t yet given his consent to the KKR offer, or indeed any offer, and the government is monitoring the situation and the impact on jobs, the network and technology, a spokesman said Thursday.

The French company has considered ousting Gubitosi, people familiar with the matter said previously. Representatives for Vivendi requested an update of the meeting agenda to discuss corporate governance, a person familiar with the company’s thinking said. Spokespeople for Telecom Italia and Vivendi declined to comment ahead of the meeting.

To help shoulder the financial burden of Europe’s biggest-ever leveraged buyout, KKR is considering teaming up with CVC Capital Partners, people with knowledge of the matter said on Thursday. The two investment firms have held exploratory talks about the potential for a joint offer, according to the people, who asked not to be identified because the information is confidential.

While KKR is studying whether to bring in a partner, the firm’s focus remains on its existing proposal, the people said. It has the ability to finance the offer on its own and could also rope in some of its fund’s limited partners as co-investors, according to the people.

(Updates with shares in fourth paragraph.)

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