Olivetti S.p.A. and Mannesmann AG last week signed an agreement to acquire U.S.-based Cellular Communications International Inc., giving the companies an increased stake in Italian mobile operator Omnitel-Pronto Italia S.p.A.
Cellular Communications’ primary asset is a nearly 15-percent interest in Omnitel Sistemi Radiocellulari Italiani S.p.A., which is a strategic joint venture that holds a 70-percent interest in Omnitel. Through that venture, Cellular Communications’ indirect stake in Omnitel works out to about 10.3 percent.
Other members of that consortium include Olivetti, Bell Atlantic International and Telia.
Olivetti and Mannesmann last year formed a joint venture, Oliman Holding B.V., to expand their position as a private competitor in the Italian telecommunications market. Olivetti holds a 62.5-percent interest in Oliman, and Mannesmann holds a 37.5-percent interest, which it will raise to 49.9 percent by February.
Oliman holds an indirect 40-percent interest in Omnitel. The acquisition of Cellular Communications would give the venture a more than 50-percent interest in Omnitel. However Mannesmann and Olivetti said they would allow Bell Atlantic, which holds a nearly 20-percent stake in Omnitel, to acquire an indirect 3.4 percent stake in Omnitel. If Bell Atlantic exercises its purchase right, Olivetti and Mannesmann would only hold a 46.8 percent interest in Omnitel.
Mannesmann also separately holds an 8.3 percent interest in Omnitel.
The mechanics of the agreement call for Olivetti and Mannesmann to commence by Dec. 18 a tender offer of $65.75 per share for all of the outstanding common stock of Cellular Communications. Following consummation of the tender offer, Olivetti and Mannesmann plan to acquire through a merger all of the shares not purchased during the tender offer at the same per-share price.
The aggregate equity purchase price on a fully diluted basis is about $1.4 billion.
Investors and reporters listening to a conference call with management of Olivetti, Mannesmann and Cellular Communications heard a sometimes heated debate concerning whether the value of the deal is appropriate. Some analysts said given the success and valuation of Omnitel, Cellular Communications might have benefited from waiting for a higher offer or remaining an independent company.
At the time the companies made the announcement Friday afternoon, Cellular Communications indicated the deal was good for shareholders in part because the per-share price was higher than the stock had ever traded. However, Cellular Communications stock closed Friday at $66.25, an increase of $4.25. The company’s previous 52-week high was $65.50.
Asked whether the companies would consider adjusting terms of the arrangement if the required majority of Cellular Communications shareholders do not accept the tender offer, Cellular Communications’ officials said they are confident enough shareholders will accept the tender offer.
