The incumbent carriers of Germany and Italy, Deutsche Telekom and Telecom Italia, unveiled their plans to merge, forming Europe’s largest and the world’s second largest telecommunication company after NTT in Japan. Approved internally last Thursday, the deal still needs clearance from both groups of shareholders, and is sure to be scrutinized by the relevant national and EU regulatory bodies. Italia has been fending off a two-month-old hostile bid from Olivetti. The offer values Deutsche Telekom at 99bn euros ($106bn) and Telecom Italia at 63bn euros ($67bn), giving the combined telco a market capitalization of 162m euros ($173bn). It currently requires an acceptance rate of at least 90% of Telecom Italia ordinary shares, though this threshold could be changed as circumstances dictate. The idea is, in any case, for the acquisition to be completed by the fourth quarter of this year. DT was at pains to point out that the proposed merger is not being carried out against France Telecom or Global One, DT’s three-way datacoms venture with the French incumbent and US long distance carrier Sprint. But negotiations with the French will now begin with a view to defining the future of the Deutsche/France Telecom alliance, which has certainly been shaken by the sudden change of direction by Bonn.
Inktomi snapped up the Impulse! Buy Network, a provider of web merchant outsourcing services for about $113m in stock. The Impulse selling system links offers from a variety of merchants and offers them to web sites to include in their shopping areas. It is used by the likes of AT&T WorldNet, Land’s End, the Go Network and Wal-Mart, among others. Inktomi is buying 100% of Impulse Buy for 900,000 of its shares, which based on last Wednesday’s close, values Impulse at $113.0m. Inktomi will add the technology to its shopping engine service that it sells to web portals by the summer and will rebadge it under its own name.
South Korea’s Hyundai Group at last reached an agreement with the LG Group to buy its memory chip business. A price of approximately $2.13bn was agreed for the sale after three months of negotiating. The money will be paid in cash, securities and equity, with around $800m of the total expected to be paid in installments over the next two years. Lee Hun-jae, head of the government’s Financial Supervisory Commission, which has been pushing to restructure the country’s massive chaebol conglomerates to help ease the financial crisis, said the merger was now a done deal. Only procedural matters were now left, he told the AP newswire. But the companies themselves have not yet confirmed that the deal is complete. Under the agreement, Hyundai will take a stake of just under 60% in LG Semicon, with the rest of the shares held by individual minority shareholders. Using last year’s figures, the resulting company would hold nearly 21% of the worldwide memory chip market, just ahead of Samsung Electric Co, which had 20.1% in 1998.
Lattice Semiconductor, the fabless designer of in-system programmable logic devices, turned out to be the buyer of Advanced Micro Devices’s Vantis Corporation. Hillsboro, Oregon- based Lattice agreed to acquire Vantis for $500m in cash. Lattice’s rival Xilinx had been rumored as a potential suitor. Based on last year’s proforma financial results, the combined revenues of the two companies would have been around $400m. Vantis, the wholly-owned programmable logic subsidiary of AMD, was spun-off as a subsidiary at the beginning of 1997, with the intention of giving it the flexibility and focus of a small company. But the unit was put up for sale in February of this year, when its parent company issued a profit warning for its first quarter. Although Vantis’ revenues were essentially flat last year, the market for programmable logic devices in general is picking up, driven by strong demand from communications and networking equipment system makers. The price includes the assumption of Vantis’s net cash and cash equivalents, expected to be around $60m at closing, which Lattice expects to happen before the end of its fiscal second quarter in September 1999.
