DENVER-Telecom Italia Spa has received permission from its board of directors to merge with
its mobile phone operator subsidiary, Telecom Italia Mobile, as a defensive measure against a hostile takeover bid from
rival Olivetti Spa, according to Italian news agencies.
Telecom Italia owns 60 percent of the cellular operator. The
merger plan must be approved by its shareholders at a general meeting April 16. Under Italy’s new takeover law, at
least 30 percent of the company’s shareholders must approve the measures before they can be enacted.
By merging
the two companies, and integrating the fixed and wireline networks, Telecom Italia hopes to raise the value of its stock
to a point beyond Olivetti’s ability to match.
The defensive measures also include a public offer to exchange new
Telecom Italia equity shares for all current Telecom Italia Mobile equity and savings shares on the market, converting
Telecom Italia savings shares into voting shares and buying as much as 10 percent of its currently held stock to inflate
share value.
Under the plan, Telecom Italia will offer four shares of Telecom Italia common stock for every five of
Telecom Italia Mobile and nine shares of Telecom Italia common stock for every 20 of Telecom Italia Mobile non-
convertible shares.
The company also wants another $21.8 billion in bank loans and could sell off some $7 billion in
real-estate interests to further fund the defensive measures.
