www.internetnews.com/bus-news/article.php/75131
By Michael Sedge March 2, 1999 In an offer unprecedented in Europe, Olivetti Spa has been given a green light to moved towards a $58 billion hostile takeover of the former state monopoly, Telecom Italia, the world's sixth-largest telecommunications company. Following the initial filing with Consob, the Italian stock market regulatory board, executives of Olivetti explained that Tecnost, the financial group controlled by Olivetti, made an official offer of 10 Euro per share. Sixty percent of this would come in the form of cash, 14 percent in Tecnost stock, and 26 percent through payment obligations over a five-year period. "We need not be afraid of new capitalism, if there is someone capable of moving the waters a bit, they're welcomed," said Consob president, Luigi Spaventa. "This company (Telecom) has been in the swamp for the past two years." Telecom Italia currently controls 100 percent of Italy's local telephone business, while sharing long distance service with Infostrada-currently owned by Olivetti-Wind, and a handful of minor carriers. Under the former monopoly's umbrella of services are also Telecom Italia Mobile (TIM), the national mobile phone network, Telecom Italia Network (TIN) Internet service, and the recently added cable television operation, Stream. "If we continue to sleep," explained Pierluigi Bersani, Italy's Minister of Industry, "outside investors will take over, today in the telecommunications sector, tomorrow in other areas." This comment came after both British Telecom and Bell Atlantic showed signs of interest in Telecom Italia. During the past year, Olivetti, through Infostrada, has established itself as an Internet service provider as well as long distance carrier. In addition, they have become Italy's fastest growing telecommunications backbone for ISPs. Under the company assets, Olivetti also owns Omnitel, Italy's second cellular phone service. To avoid anti-trust action, and paving the way for its takeover of Telecom Italia, Olivetti has already established an agreement with German telecommunications giant, Mannesmann, to purchase its share of both Infostrada and Omnitel for $8.67 billion. While the announcement of Olivetti's offer created initial resistance on the part of some, during the week that followed, the take-over bid appeared to be getting closer to reality. There are still be several regulatory hurdles to overcome before Olivetti can officially take control of Telecom Italia, however, the initial green light from Consob and government entities was reached last week. One question still not settled on the business front is whether the cellular operation TIM will be part of the package or continue as a separate entity. |
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