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April 17, 1988


By CBR Staff Writer

The labyrinthine negotiations that led to the stand-off between AT&T Co and Ing Olivetti SpA are far from easy to untangle, but the Wall Street Journal now reckons that the talks about AT&T raising its stake from the present 22% were initiated by Carlo de Benedetti – because at the time he needed additional cash for his less than successful siege of Societe Generale de Belgique SA. But during the course of the talks, he found something else to sell, and anyway was uncomfortable about handing management control of Olivetti over to AT&T. As a result, the two parties parted with those significant basic differences between them. the question exercising observers now is whether AT&T will hold on to its present 22% – it bought the shares for $260m and they are now worth nearly $1,000m, offering a very attractive capital gain. Olivetti’s problem is that on balance it needs AT&T more than AT&T needs Olivetti, since other suppliers could easily be found for AT&T’s personal computers, but the business is crucial for keeping Olivetti’s volume up and prices down, whereas AT&T has really not got that much to show for the tie. The bad atmosphere between the two partners is underlined by the fact that according to the Journal, while AT&T is saying firmly that the man is absolutely an AT&T employee, Olivetti officials are saying that AT&T Data Systems chief Vittorio Cassoni is simply on secondment from the Ivrea company.

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