The market applauds the Telecom Italia-Tim reorganization. All the securities involved in the operation today have in fact made a spree in Piazza Affari. The positive view on Telecom with the possibility, according to some analysts, of an increase in the dividend, despite yesterday the number one of the Marco Tronchetti Provera group said that the coupon will be stable, also supported Pirelli and Camfin, also thanks to the hypothesis, more in the medium-long term, of a further shortening of the chain with a Pirelli-Olimpia integration.
We remind you that to get to baptize the new Telecom, the group announced a cash offer on 2/3 of the free float of Tim ordinary shares at 5.6 euros per share and a subsequent merger with an exchange of 1.73 Telecom shares for each Tim. Today the securities linked to the maneuver have adapted to these values, exceeding them in some cases. Telecom closed at 3.02 euros and rose 2.33% with 591 million pieces traded, equal to 5.73% of the share capital, from a daily average of 98 million.
While Tim ordinary has adapted to the offered price of 5.6 euros with a + 5.49% to 5.45 euros. The latter value remained slightly above the exchange between the two securities, TI-Tim, set at 1.73 shares of the parent company for each share of the subsidiary. Also in this case there were exchanges with 383.9 million pieces (4.55% of the capital) from an average of 63.8 million. Even the Tim savings share exceeded the values ​​of the takeover bid: it marked a + 5.47% to 5.67 euros.
On the other hand, the Telecom savings, which are not involved in the operation, made progress of 2.92% to 2.25 euros. Forti, upstream of the control chain, Camfin (+ 3.99% to 2.165 euros) and Pirelli (+ 3.96% to 0.96 with 61.3 million units traded equal to 2.94% of the share capital), despite the fact that the Bicocca group will have to face a capital increase of one billion euros, equal to one third of the company’s market capitalization.
In other words, the risk is that the minority shareholders of Pirelli find themselves subscribing to a capital increase in order to allow the company and therefore Olimpia to strengthen their stake in Telecom Italia at rather high prices. There remains uncertainty about the position of the Benetton family and the reasons for a possible non-participation in the
“But even if in the short term the Pirelli stock could suffer, also taking into account the announced share capital operation, in the medium-long term the possibilities of appreciation linked to the creation of value in Telecom Italia remain interesting”, underlined the analysts today. of Banca Akros which brought TI’s new target price to € 3.5 per share from the previous € 3.3, confirming the recommendation to accumulate.
“We have calculated that a 10% change in Telecom Italia’s price corresponds, in fact, to an 8% change in Pirelli’s price”, they estimated the investment bank. “In light of the above elements, we have reduced our recommendation on Pirelli from buy to accumulated, leaving our target price unchanged at 1,
In general, however, today’s race of the Tronchetti Provera stable is not only attributable to the alignment of the prices with the values ​​of the offer, but also to the positive opinion expressed by international brokers, favorably impressed by the amount of cash distributed and overall by a operation that could allow a revaluation of the new IT in the order of about 10% -15%.
For analysts, in fact, the operation is positive in terms of value creation, “due to the increase in debt that optimizes the financial structure”, said Enrico Coco, an expert at Banca Leonardo who raised Telecom Italia’s target price to 3.4 from 3 euros. Morgan Stanley also raised the target price of TI ordinary shares to 3.6 from € 3.5 (confirmed overweight) and that of savings (equal weight) to 2.5 from € 2.45.
According to this investment bank, the transaction is increasing on the 2005 and 2006 earnings per share estimates with an increase of 13% and 11% respectively. Similarly, Lehman Brothers, while confirming the equal weight judgment on Telecom Italia, raised the target price to 3.15 from 3 euros and the estimates of Eps 2005-2006 by 9% respectively to 0.20 from 0.18 euros. and 0.24 from 0.22 euros.
For the experts of the American investment bank, the operation appears fair for all categories of Telecom Italia shares, both ordinary and savings. “However, after the recent outperformance”, reads the Lehman Brothers note, “the valuation of Telecom Italia ordinary and expensive shares compared to the sector. increase in Olimpia’s share in the tlc group “.
“Considering the re-leveraging and the low cost of financing, we estimate a positive effect on Telecom Italia’s valuation, which can be quantified at around € 0.20 per share”, Akros analysts calculated. “We believe that the Tim ordinary share can stabilize around the implicit price of the transaction, which is € 5.46, with any further possible appreciation linked to the behavior of the TI ordinary shares”.
“While the Tim savings are expected to come in at the cash offer price of 5.6 euros,” they added to the home business. In contrast to most merchant banks, WestLB cut Tim’s rating to neutral from outperform. On the other hand, it is difficult to think of further upside margins for the action of the mobile telephone company from these levels with a takeover bid at 5.6 euros.
“We suggest joining the offer which we believe will be successful,” Centrosim analysts told MF-Dow Jones, considering the price of the takeover bid to be fair. Overall “the transaction creates value and benefits exist for all shareholders. Our target for the new Telecom will be 14% higher than the current one”,
Holders of Tim shares will be able to choose whether to accept the offered price of 5.6 euros per share during the month of January. A tip
“Tim’s shareholders can subscribe to the offer for 66% in cash and play the remaining 33% on the new story”, suggests the analyst of a major foreign investment bank that has a neutral rating on Tim . “The new Telecom is expected to maintain the same dividend, but this implies a return of 3.5% for Tim shares against the current 5.7%.”
In any case, “the shares not covered by the offer are entitled to the 2004 Tim dividend equal to at least 0.26 euros per share before receiving 1.73 euros ex dividend of the Telecom Italia shares”, explained the analysts of Dresdner Kleinwort Wasserstein . “Such a structure means that Tim shareholders own an option on TI common stock.”
The experts of this other investment bank, who cut Tim’s rating from buy (buy) to hold and the target from 6 to 5.6 euros, thus aligning themselves with the value of the takeover bid, and at the same time raised TI’s target price from 3 to 3.2 euros while maintaining the buy judgment unchanged, however, they argue that the acceptance of the condition of a
“In fact, if the market were to perceive that the proposed merger with Tim increases the value of Telecom Italia above 3.2 euros, it is unlikely that the bid will exceed 2/3 of the free float”, they warned Dresdner, “and this could potentially decrease the cash component of the transaction to 10 billion euros, eliminating the increase in EPS and limiting the increase in free cash flow per share to 4% “. However, one thing is certain: Tim’s prices are now set to move around these levels in Piazza Affari between now and January 2005 when the offer is scheduled to launch. Francesca Gerosa and Paola Longo

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