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Telecom Italia seeks suitor?
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April 13, 1999: 3:21 a.m. ET
Report: TI examining defensive takeover by shell company or strategic partner
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LONDON (CNNfn) - Telecom Italia is seeking to boost its defense against Olivetti's hostile $65 billion bid by courting a strategic investor or recapitalizing the company, according to a report published Tuesday.
Telecom Italia's defense stumbled Saturday when it was forced to cancel a shareholders' meeting designed to approve its restructuring plan. Saturday's meeting failed to register a quorum.
The recapitalization plan calls for a new shell company to make a prearranged bid for the telecom giant, said The Wall Street Journal Tuesday. TI has already secured a credit line of more than 20 billion euros ($21.7 billion) arranged by its financial advisers.
The shell company would then merge with its new acquisition and have more flexibility under Italian law to mount a share buyback and distribute dividends, key parts of TI's defense strategy, said the Journal.
The second option is to attract a strategic investor to take a minority stake at a price above the 11.50 euros a share tendered by Olivetti in its latest offer.
A counter-bid is seen as more complex than a recapitalization, but an offer by a partner such as Telefonica de Espana would open the way for a large pay out to existing shareholders and leave them with majority control, the newspaper reported.
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Olivetti
Telecom Italia
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