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(Reuters) -European shares rose on Monday as Telecom Italia (MI:TLIT) led a rally in the sector following a $12-billion bid from U.S. fund KKR to take Italy’s largest phone group private.
The pan-European STOXX 600 rose 0.2%, reversing some of Friday’s declines inflicted by a surge in COVID-19 cases that prompted Austria to go back into lockdown and neighbouring Germany to warn it may follow suit.
Telecom stocks rose 1.1% – set to log their best day in four months – fuelled by a 24% jump in Telecom Italia (TIM) to its highest level since June.
KKR reportedly set an indicative price of 50.5 euro cents for its buyout offer – a 45.7% premium to TIM’s closing price on Friday.
“The premium is very attractive, which is why we’re seeing a big jump in shares, but an interesting thing is going to be the Italian government’s response to the bid, which lays the groundwork for future outside offers – and all the important Italian companies who’ve fallen on tough times,” said Craig Erlam, senior market analyst at OANDA.
Italian mobile tower company Inwit, partly controlled by TIM, gained 4.4% as the KKR approach created speculative appeal for the firm, while TIM’s top investor Vivendi (OTC:VIVHY) rose 2.3%.
The European benchmark logged its first weekly drop in seven weeks on Friday as worries about the impact of renewed COVID-19 restrictions knocked cyclical sectors such as automakers and banks.
But those sectors rebounded on Monday, with banks, mining and industrial companies all advancing.
“No matter how long the list of downside risks get or how concerning situations become, European markets have been showing incredible resilience,” said Erlam.
In another telecoms deal, Norway’s Telenor climbed 1.8% after agreeing to merge its telecom unit with Thailand’s Charoen Pokphand Group in a deal valued at about $8.61 billion.
Sweden’s Ericsson (BS:ERICAs) slid 4.1% after the mobile telecoms equipment maker agreed to buy cloud communications firm Vonage for $6.2 billion.
Wind turbine maker Vestas skidded 2.3% after saying it was hit by a cyber attack that affected its IT systems and compromised data at the Danish firm.
