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Italia bid battle heats up
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May 18, 1999: 10:19 a.m. ET
Twists and turns as titanic European telecom contest enters crucial stage
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LONDON (CNNfn) - The fierce battle for control of Telecom Italia heated up Tuesday, as the contest appeared set to enter its final stages.
Olivetti's brash $65 billion takeover offer for its much larger rival expires Friday, and although the former typewriter maker has few acceptances so far, the cause is not lost. Several major institutional shareholders have indicated they will tender their shares, or will wait until the very last minute to make up their mind.
Bankers close to Olivetti said Tuesday they had received interest worth some $7.5 billion in the bookbuilding process for bonds to be issued by Tecnost, the Olivetti subsidiary that is the vehicle for the bid.
Italian insurance giants Generali and INA said Tuesday they would wait until the last day of the offer before casting their votes. They are part of a shareholder group controlling 7 percent of Italia.
However, Olivetti was supported by statements from U.S. investment fund Templeton. Paolo Catafalmo, managing director for Italy for the investment group, told Reuters:
"It's probable that we, like most other institutional investors, will take up Olivetti's offer unless anything new comes up on the market."
Telecom Italia managers Tuesday dismissed Olivetti's chances of winning over a majority of shareholders, and said a 35 percent holding is all the bidder could hope for. With less than 50 percent, based on complicated Italian takeover rules, there is likely to be a legal challenge over whether Olivetti's voting power would be limited to 3 percent of the votes.
Bonn OKs Deutsche merger
Separately, Italia's proposed merger to create a $173 billion telecom colossus with Deutsche Telekom received a boost Tuesday, when Gerhard Schröder, Germany's chancellor, gave the green light to the deal.
"The German government approves of such a merger and will approve the budget necessary to achieve it," Schröder told a news conference, shortly after a meeting with Italian Prime Minister Massimo D'Alema.
Italia said Tuesday it would hold a shareholder meeting on June 28 or 29 to approve the proposed merger.
The twists and turns of the day's events did little for the stock prices of any of the companies involved. Deutsche Telekom (FDTE) eased less than 1 percent to 34.25 euros in Frankfurt, while Italia and Olivetti were unchanged in Milan at 9.48 euros and 3.17 euros respectively.
-- from staff and wire reports
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