Control of Telecom Italia changes hands

MILAN, Italy—Control of Italy’s largest telecom company Telecom Italia has changed hands, with Pirelli, an Italian tire and cable company, and Edizione, the holding company for the Italian Benetton family, buying a 23-percent stake in Olivetti for about US$6.1 billion. Olivetti owns 55 percent of Telecom Italia, which in turn owns 56 percent of mobile operator Telecom Italia Mobile (TIM).
The Italian companies purchased the stake from Bell, a Luxembourg-based holding company controlled by Olivetti and Telecom Italia Chief Executive Officer (CEO) Roberto Colaninno. Colaninno, which gained control of Telecom Italia by spearheading a hostile bid in May 1999, resigned.
The price is an 80-percent premium over last week’s closing price for the shares held by Bell.
In 1999, Olivetti won a hostile US$33 billion bid for 51 percent of Telecom Italia. Since then, Colaninno has made several attempts to reduce Olivetti’s considerable debt of about US$12.3 billion, but has been unsuccessful.
Enrico Bondi, former CEO of Montedison, will serve as a co-chief executive, along with Carlo Buora of Pirelli.
The Italian government owns a 3.4-percent stake in Telecom Italia and did not object to the deal.