Italy’s stock market regulatory agency Consob has ruled Olivetti Spa’s revised hostile takeover
bid of Telecom Italia can take place, severely hampering the latter company’s efforts to block the
endeavor.
Olivetti’s original bid was ruled inadmissible by the agency the week prior because it lacked several
needed elements. The revised bid sets an April deadline for the tender offer to proceed-$11 a share for all 5.23 billion
Telecom Italia common stock.
Olivetti now must submit a detailed prospectus of the proposal to Consob, which will
have 15 days to approve it.
Due to strict new takeover legislation in Italy, Consob’s recognition of Olivetti’s bid
means Telecom Italia can make only very limited moves to fend off the takeover attempt. Any plan the company comes
up with must be approved by at least 30 percent of the company’s shareholders before it can be enacted.
In light of
the fragmented nature of Telecom Italia shareholders, this requirement could leave the company vulnerable to the
takeover. None of the company’s 1.5 million shareholders owns more that 3 percent of the company, except for the
Italian government, which once owned Telecom Italia outright before privatizing it in 1997.
Franco Bernabe,
Telecom Italia chairman and chief executive officer, is said to be considering several possible defensive measures, most
notably that of merging with its 60-percent owned mobile phone subsidiary-Telecom Italia Mobile.
Telecom Italia
also may launch a legal challenge to the takeover effort, which it called full of holes. But any legal challenge now
would require Telecom Italia to sue Consob.
