Telecom Italia Shares Rally After Poste Italiane Sweetens Takeover Offer

Shares of Telecom Italia (TIM) rallied Tuesday after Poste Italiane revised the terms of its public tender and exchange offer, increasing the deal's value and removing a significant hurdle to its completion.

The stock gained 2.2% to trade at €7.635 after the announcement. The move reversed a sharp decline from the previous session, which was triggered by a low initial acceptance rate for the offer.

Revised Offer Details

Poste Italiane sweetened its bid by raising the cash portion while keeping the stock-swap element the same. The key changes to the offer, now valued at approximately €11.3 billion, include:

• An increased cash component, rising from €1.67 to €1.97 per TIM share.
• An unchanged share-exchange ratio of 0.218 Poste Italiane shares for each TIM share.

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Crucially, Poste Italiane also removed the minimum acceptance threshold of 66.67%, which had created significant deal-failure risk for investors. The acceptance window has been reopened from September 21 to September 25.

Market Impact and Context

The improved terms helped close a nearly 3% gap that had emerged between TIM's market price and the implied value of the offer, prompting arbitrage-driven buying. The rally was a direct response to the new terms, coming after initial acceptances stood at just 4.9% of TIM's capital in the prior session.

Investor confidence was further bolstered by the decision of TIM CEO Pietro Labriola and other senior executives to tender their own shares, signaling their endorsement of the revised bid. The move also follows a recent action by Moody's, which placed TIM's Ba1 credit rating on review for a potential upgrade of up to two notches following the initial offer announcement, adding a positive credit outlook to the equity story.