Olivetti SpA has succeeded in winning a controlling 51.02% stake in Telecom Italia SpA, after a late rally from Telecom Italia shareholders favored Olivetti’s $65bn bid to acquire its larger rival. Friday was the closing date for Olivetti’s share tender and most shareholders waited until the last minute to declare whether they would accept Olivetti’s hostile offer.
Olivetti’s managing director, Roberto Colaninno, said the news represented a positive response to the 11.5 euros per share cash and paper offer and also re-affirmed the reliability and transparency” of Olivetti’s industrial plan for its target. Milan bourse officials had previously said that Olivetti had won more than 50% of Telecom, and had therefore secured majority control.
Going into the last day, the company has raised just under 20% of Telecom Italia’s shares, but on Friday key shareholders lent their support to Olivetti’s bid. Major banks and insurers with a combined stake of around 6% dashed to switch allegiance and accept Olivetti’s offer.
Italy’s leading bank, San Paolo-IMI, which was advising Telecom’s defense, sold its Telecom Italia shares to Olivetti. So too did UniCredito, Rolo Banca and BCI banks. Leading insurers Generali, INA and Alleanza also backed Olivetti, as did IFIL, the holding company of the powerful Agnelli family.
The only member of the shareholder core that did not lend its support to Olivetti’s bid was Credit Suisse Group. It said late Thursday that it would not tender its 0.79% stake.
Olivetti’s takeover success is a terrible blow to Deutsche Telekom. Telecom Italia and its German counterpart announced plans for a friendly merger in April, as a way to see off the Olivetti bid. However, the deal, which looked to be born of opportunism on Deutsche Telekom’s part, encountered resistance from the Italian government and skepticism from investors.
Olivetti’s victory signals the German carrier losing far more than a bidding war. The company has alienated its strongest ally and long-time partner France Telecom SA. The two companies, whose CEO’s sit on each other’s boards, became estranged after Deutsche Telekom instigated merger talks with Telecom Italia and, in so doing, pushed France Telecom aside.
France Telecom has subsequently taken legal action against Deutsche Telekom for violating alliances between the two national carriers since both companies have built an entire global strategy around a now crumbling partnership. Both companies are also the founders of the GlobalOne partnership which has had a doubtful future since acrimony first surfaced over the Telecom Italia bid.
On Friday, Deutsche Telekom said only that it would have to discuss the new situation” with Telecom Italia before making any further decisions. Putting a brave face on what was the worst of outcomes for his executive team, Telecom Italia managing director, Franco Bernabe, said the company had emerged from the merger battle stronger and more credible with an increased level of international visibility. However, Bernabe is likely to be one of the first casualties given his hostility to the Olivetti bid. The 50-year-old managing director joined Telecom just six months ago.
