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Deutsche, Italia parla deal?
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April 15, 1999: 7:52 p.m. ET
Deutsche Telekom and Telecom Italia said to dial into record merger talks
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NEW YORK (CNNfn) - In what could lead to the largest deal of its kind in history, Deutsche Telekom and Telecom Italia are discussing a potential merger, according to a published report.
The resulting company would be worth $216 billion and the merger, if it happens, would surpass the recently announced Exxon (XON) and Mobil (MOB) union, the British business newspaper the Financial Times reported. The newspaper did not identify a source for the information.
The two telecoms reportedly had been in discussions for months, but the pace accelerated as Telecom Italia saw a need to ward off a hostile takeover attempt by Olivetti, the Financial Times said.
The paper said that the deal would have to happen quickly to keep Olivetti from moving in on Telecom Italia.
Deutsch Telekom said it would not participate in speculation on any talks. The company has a market capitalization of $117 billion, while Telecom Italia has a market value of roughly $77 billion.
The German government is a majority holder in Deutsch Telekom and Telecom Italia officials are said to be insisting that the German government agrees to sell 74 percent of its stake over a certain period and limit its voting rights in the meantime.
The European Commission would scrutinize the merger for antitrust issues because Deutsche Telekom already has a relationship with France Telecom. The Italian company is suggesting that the German corporation drop its alliance with France Telecom as part of the deal, the report said.
American depositary receipts of Deutsche Telekom were down 3-1/2 Thursday to close at 40-15/16, while ADR's of Telecom Italia were up 3/8 to 104.
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