U.S. private equity giant KKR & Co. has made a EUR10.8 billion offer to purchase Telecom Italia SpA, Italy's largest phone company, and take it private. Telecom Italia's shares rise sharply on the news. Its board considers the bid friendly but its largest shareholder, Vivendi SE, might oppose a takeover.

BT Gains After KKR's Telecom Italia Offer

1151 GMT - Shares in BT Group are among the biggest FTSE 100 risers, up 2.9% amid takeover activity in the European telecoms sector. BT and other European telecom shares rally after investment firm KKR & Co. expressed interest in taking Telecom Italia private through an offer valuing it at roughly 10.79 billion euros ($12.17 billion). The move by KKR has rekindled talk about a possible takeover of BT, including speculation that Altice's Patrick Drahi, a BT shareholder, could launch a bid for the U.K. telecom, analysts say. "In coming quarters, we expect the shares to be volatile on news flow regarding VMO2 wholesale options and/or any speculation/update on Patrick Drahi's motivation with his 12.1% stake," Citigroup analysts say. (philip.waller@wsj.com)

Telecom Italia's Possible Takeover Could Hurt Bondholders

1135 GMT - U.S. fund KKR's proposal to take Telecom Italia private could hit bondholders of Italy's biggest phone group, says ING. Telecom Italia said on Sunday its board had examined a non-binding bid for EUR11 billion by KRR. This makes a "scenario with a low BB or B+ rating becomes more likely, but also a scenario where Telecom Italia loses control over its fibre network," says ING's Jan Frederik Slijkerman. He expects Telecom Italia's bonds to widen versus senior secured bonds of VodafoneZiggo as a first reaction. Yet they could also trade narrower in an scenario in which the Italian government may not want their main carrier to carry a lot of debt and there is more clarity on the roadblocks to a transaction, he says. (lorena.ruibal@wsj.com)

European Telecom Shares Rise After KKR Approach on Telecom Italia

1040 GMT - Shares in European telecommunications companies are on the rise on Monday after investment firm KKR expressed interest in taking Telecom Italia private through an offer valuing it at roughly EUR10.79 billion. Telecom Italia shares are up 27%, while Spanish peer Telefonica is up roughly 4.9%. France's Orange trades 1.3% higher, with Germany's Deutsche Telekom up 1.2% and Telefonica Deutschland up 1.3%. (mauro.orru@wsj.com; @MauroOrru94)

Vivendi Is Expected to Oppose KKR's Approach for Telecom Italia

1024 GMT - Vivendi will likely oppose a potential deal for investment firm KKR to buy out and delist Telecom Italia, Bryan Garnier says, noting Vivendi might consider KKR's offer at EUR0.505 a share as too low. "We expect Vivendi to oppose the deal, to push for the replacement of [CEO] Gubitosi instead and to try and weigh more on the company's operations in order to restore the company's performance without having to spin off its most valuable assets," Bryan Garnier says. Telecom Italia shares trade 25% higher at EUR0.43. (mauro.orru@wsj.com; @MauroOrru94)

European Stocks Gain as Telecom Shares Rise

1001 GMT - European markets gain as telecom shares rally after investment firm KKR & Co. expressed interest in taking Telecom Italia private through an offer valuing it at roughly 10.79 billion euros ($12.17 billion). The Stoxx Europe 600 and CAC 40 rise 0.2%, the FTSE 100 is up 0.3% and the DAX 40 is broadly flat. Brent crude advances 0.4% to $79.21 a barrel. The takeover interest in Telecom Italia sent its shares up 22%, while Telefonia, BT, Vodafone and Royal KPN all rise.(philip.waller@wsj.com)

KKR Seen as Better Fit for Telecom Italia's Turnaround

1001 GMT - KKR might be more successful at delivering a turnaround at Telecom Italia than other shareholders at the telecommunications company, UBS says, after the investment firm expressed interest in taking TIM private. "At present, there is no visibility on KKR's plan, however we note an experienced private capital provider such as KKR might prove a better fit to support TIM's turnaround compared to the reference shareholders that have controlled TIM over the last 20 years, thanks to its long investment horizon, its ample financial resources and the extra flexibility allowed by the delisting," UBS says. Telecom Italia shares trade 23% higher at EUR0.42. (mauro.orru@wsj.com; @MauroOrru94)

FTSE 100 Rises as Telecom Stocks Rally

0900 GMT - The FTSE 100 rises 0.5% to 7256 points as telecoms stocks BT Group and Vodafone gain after Telecom Italia received a EUR10.8 billion takeover approach from U.S. fund KKR. "The offer signals a broader appeal to deep-pocketed U.S. private equity giants of the European telecoms sector and could provide much needed support to the Italian business which has struggled with two profit warnings this year," Interactive Investor analyst Victoria Scholar says. The FTSE 100 is attempting to recover from last week's losses, which were driven by weaker travel stocks and commodities, and its next major hurdle is 7,300 points, she says. (renae.dyer@wsj.com)

Telecom Italia Could Benefit From Private Ownership, DB Says

0802 GMT - KKR's show of interest in Telecom Italia is good news both for the company and the broader sector, Deutsche Bank analysts say. The bank says that while the Italian company offers value, it needs strategic action to unlock it, which is proving difficult with its current shareholder structure. Vivendi holds about 24% of the company and state-controlled investment bank Cassa Depositi e Prestiti owns about 10%. Taking the company private could make it easier to take the necessary action, DB says. The bank says the news supports its argument that telecom infrastructure remains undervalued in public markets, and that private interest in such assets could continue if public markets fail to value them properly.(cristina.roca@wsj.com; @_cristinaroca)

KKR's Bid for TIM May Be Too Low for Stakeholder Vivendi

0713 GMT - Vivendi is likely to stand against a takeover bid for Telecom Italia on the grounds that it is too low, Jefferies says, after U.S. private-equity company KKR made a EUR10.8 billion all-share offer for the phone company. The bid of 50.5 euro cents a share may be too low for the French media conglomerate, which has accumulated a 23.75% stake in TIM at an average EUR1.07 a share, Jefferies says. Under Italian listing rules, 95% shareholder approval is needed to enforce a minority squeeze-out, the bank notes. Nevertheless, it seems "unpalatable" for Vivendi to continue as a passive shareholder without the ability to transform TIM as part of its wider strategy, Jefferies says.(joshua.kirby@wsj.com; @joshualeokirby)

TIM's Cloudy Outlook Could Ease Govt View on Takeover Bid

0653 GMT - Telecom Italia's uncertain midterm future could lead the Italian government to look favorably on a takeover bid by U.S. private-equity firm KKR, analysts at Jefferies say. TIM, Italy's largest phone company, said over the weekend that it had received a friendly and non-binding all-share offer of EUR10.8 billion from KKR, with a view to delisting. A takeover would need the approval of the Italian state, a TIM shareholder, but this could well be forthcoming if the company proves unable to deliver on mid-term investment plans, Jefferies says. TIM is guiding for a return to growth next year, but this depends on market factors, and domestic guidance has been lowered in recent quarters, the bank notes. (joshua.kirby@wsj.com; @joshualeokirby)