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.
