Tim, the stock flies but for now the offer of the Kkr fund is just an announcement. Here’s what has to happen for it to materialize

Since the possible offer of the Kkr fund on Tim was announced, the stock flew by about 40 percent. Despite the expression of interest, not binding, has been confirmed by the company with the convening of an ad hoc council and Kkr has also indicated a price (50 cents), however, there is still no formal step for a takeover bid (Opa). And it could not be otherwise given that the US fund has explained that it has to carry out an adequate budget analysis, the so-called due diligence, which allows to identify the right value of the company to establish the amount to put on the plate for the acquisition. This is why, on the Tim affair, also the minister of economic development, Giancarlo Giorgetti, he pointed out that “The government will assess (…) when the takeover bid will take place and when the plan will be detailed. At this moment there is only an expression of interest “.

What exactly does this mean? And how does a takeover bid work? “According to the consolidated law on finance, The offer must be communicated to Consob and contextually to the market as soon as there is the decision to promote the purchase. And that is when there is the resolution of the competent body, or the board of directors of the group promoting the offer ”he explains Andrea Tucci, full professor of economic law at the University of Foggia, where he teaches banking law, financial market law, listed company law and commercial law. “Subsequently (within 20 days, ed) the potential buyer is required to deposit with Consob the Informative prospect for which it must obtain the green light from the supervisory authority. Only with Consob’s ok can you enter then in the operational phase of the offer “he concludes. In short, the rules of engagement are clear.

But in the meantime it is a fact that on the markets there are cooked and raw ones. Takeover bids announced and never formalized. Leaks that blow up financial operations. Market disruption. And so on and so forth, put more. It is no coincidence that the unwritten rule of the markets is: buy on rumors and sell on news (in jargon buy on rumors, sell on news). For its part, the national and EU legislator has attempted to stem the effects deriving from the dissemination of information capable of making the stock rise or fall on the stock market (the so-called, price sensitive).

In the case of the Kkr fund’s potential offering on Tim, for example, the company led by Luigi Gubitosi and chaired by Salvatore Rossi has correctly applied the legislation on market abuse. “In practice, following the succession of rumors on the market and the arrival of the offer, Tim’s top management promptly convened a council and unveiled the presence of the offer to put all investors on the same level and avoid that few could benefit from the possession of sensitive information. Investors have reacted by buying stocks, but only for a short time reaching the price indicated by Kkr of 50 cents per share. A sign that the market has given a price also to uncertainty linked to the actual realization of the offer ”explains an expert source of financial markets who prefers to remain anonymous. Meanwhile, pending due diligence, the rumor of a possible relaunch for the possible offer of up to 80 cents according to the Bloomberg agency and then denied by the US fund.

The whole story demonstrates how the management of financial information is a very complex issue. With a very varied and articulated case history. A few examples? In Paris they are still awaiting the details of the takeover bid that Enel was supposed to launch on Suez in 2006. Everything seemed ready and instead then the group, at the time led by Fulvio Conti, did not formalize the proposal because it got in the way of the French state. With a lot of veto power. At Piazza Affari then everyone remembers the hypothesis of 2007 takeover of listed Alitalia, costing the former president of the Constitutional Court and Rai a three-year prison sentence.

The accusation? Market manipulation with information that had altered the normal share price of the Alitalia stock. Not to mention the leak that effectively prevented the bank in early 2017 Intesa Sanpaolo to launch a public exchange offer on General. To be fair, there was no shortage of blitzes that hit the mark. One of the largest and most important in recent financial history in Italy was the offer of the French bank Bnp Paribas on the National Labor Bank in 2005. Until the day before the offer was filed, he did not filter the slightest information on the market. Thus the operation, which involved the purchase of the majority package of the bank in the hands of Unipol and to a group of minor shareholders, it went through as per the finance textbook.

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