A London-based investment firm led by former JPMorgan Chase & Co. banker Alessandro Barnaba unveiled a surprise plan for Telecom Italia SpA that would halt the sale of its landline network and replace the company’s chief executive officer.
Merlyn Advisors Ltd, a minority investor in Telecom Italia, wrote to the company’s board on Friday calling on the phone carrier to keep the grid while selling its consumer division and its Brazilian unit Tim SA, according to a document seen by Bloomberg.
The plan proposes an eventual merger between Telecom Italia and Open Fiber SpA without the smaller rival’s metropolitan areas, which would eliminate antitrust risks, according to the document.
Merlyn’s plan calls for Italy’s state lender Cassa Depositi Prestiti to have a strategic role in the proposed new company. CDP owns about 10% of Telecom Italia and controls Open Fiber.
Merlyn called Telecom Italia CEO Pietro Labriola’s performance “truly disappointing” and proposed former Telecom Italia deputy managing director Stefano Siragusa to replace him. Siragusa’s alternative asset manager company RN Capital Partners joined Merlyn in the proposal.
Representatives for Telecom Italia, Merlyn and RN Capital declined to comment.
“We want a state-led national network like Terna, because this will create great value for everyone,” Barnaba said in an interview with Italian newspaper la Repubblica on Saturday, referring to Italy’s state-controlled electricity grid operator.
“We don’t want a foreign fund,” Barnaba added, clarifying that Merlyn hasn’t yet held talks with CDP nor with the French media company Vivendi SE, Telecom Italia’s largest investor.
Read more: KKR Makes Binding Offer for Telecom Italia’s Phone Network
The network sale is Labriola’s brainchild and would be a milestone for Telecom Italia as it seeks to slash about its gross debt of about €30 billion.
Network Dilemma
US private equity giant KKR & Co. made a binding offer this month that will be reviewed by Telecom Italia’s board next week. KKR valued the company’s landline grid at about €23 billion, including some earn-outs, people familiar with the matter have said.
Merlyn’s move could be a strategic assist for the French media conglomerate Vivendi SE, which has opposed the deal for months saying it wouldn’t accept any network offer of less than €30 billion. A spokeswoman for Vivendi declined to comment on the Merlyn letter.
Merlyn owns less than 3% of Telecom Italia, but the firm’s letter said it would consider raising its stake to slightly more than the 5% threshold to call a shareholder meeting if the board fails to remove Labriola.
--With assistance from Alberto Brambilla.
(Updates with Barnaba comments from 7th paragraph.)