MILAN- The chances of U.S. fund KKR pushing ahead with a firm bid for Telecom Italia (TIM) appeared to fade further on Tuesday, with the two sides deadlocked over access to the company's books.
KKR has told TIM it cannot confirm a bid unless Italy's biggest telecoms group provides access to its books under a due diligence process, according to two sources with knowledge of a KKR letter to TIM's board.
TIM, which is pushing ahead with its own standalone plan, wants to give the fund access only once a formal bid is made.
"The odds of the deal seem now very low," analysts at Banca Akros said in a note.
TIM shares slid a further 1.8% in early trading in Milan to 0.31 euros, a long way short of the 0.505 euro price at which KKR's initial 10.8 billion euro ($11.9 billion) approach was pitched last November.
KKR said in its letter that it remained interested in acquiring TIM but needed more information as the war in Ukraine had changed market conditions. TIM has cut its outlook and suffered a series of credit rating downgrades.
Under new Chief Executive Pietro Labriola, TIM is pursuing a strategy centred around a split of its wholesale network operations from its service business.
Even if the KKR deal falls through, TIM could find itself with new partners under its restructuring.
European private equity fund CVC has approached TIM about potentially taking a stake in an enterprise services business that could be spun out of the group.
TIM has also signed a non-disclosure agreement with Italian state lender CDP to start formal talks on potentially combining the phone group's network with that of smaller broadband rival Open Fiber.
TIM's board is expected to discuss KKR's letter and the proposal from CVC on Thursday.
($1 = 0.9106 euros)
(Reporting by Elvira Pollina Writing by Keith Weir Editing by Mark Potter)