do you think this one might fit the bill, jane??
kathy :)
No Names Yet on Deutsche Telekom's Shopping List
By Kate Norton at Bloomberg News
05 May 1999
Deutsche Telekom AG, which last month agreed to buy Telecom Italia SpA for $92 billion, said it will sell shares next month at close to the market price as Europe's No. 1 phone company seeks to raise as much as $11.1 billion to fund further acquisitions in Europe.
The Bonn-based company will announce on May 28 the number of shares it will issue. It said earlier this month it wants to sell all the 286.3 million shares it's authorized to sell, raising as much as 10.3 billion euros at today's closing share price in what would be Europe's largest-ever stock offering.
Deutsche Telekom last month offered to buy Telecom Italia to create the world's largest phone company and fend off Olivetti SpA's $65 billion hostile offer for its Italian rival. Though the offer still faces regulatory and shareholder hurdles, it's just the first step in Telekom's effort to expand abroad to counter competition at home.
"Whether or not Telecom Italia works, they have to use the money on more acquisitions if they want to be a large presence," said Robert Halver, an analyst at Delbrueck & Co. "The beat goes on."
Deutsche Telekom is already planning to buy control of another European phone company this year, and plans to gain control of two others next year, Chief Financial Officer Joachim Kroeske said at a press conference.
Kroeske declined to name acquisition targets, though he said the company wants to strengthen its mobile phone and city networks activities.
"The sales that we're losing in Germany we need to make up abroad," Kroeske said.
Deutsche Telekom CEO Ron Sommer has made no secret of the former monopoly's need to expand internationally, especially to keep pace with U.S. rivals like AT&T Corp. that have embarked on acquisition sprees at home and abroad.
The takeover of Telecom Italia "would be the first step in creating a truly international telecommunications corporation located in Europe," Sommer told journalists at a press conference in Bonn.
Deutsche Telekom frequently has been linked to a host of companies, including with Cable & Wireless Plc, the No. 2 U.K. phone operator that has a strong presence in Asia.
The German company has also declined to comment on U.K. news reports that it's planning a bid for One 2 One Ltd., the U.K.'s smallest mobile phone operator that C&W and MediaOne Group Inc. want to sell.
Telekom said today said it was in talks with France Telecom SA last year to merge some or all of their operations, though the two couldn't agree.
CEO Sommer has also been keen to win the German company a greater U.S. presence, but a big U.S. company won't come cheap. U.S.-based Sprint Corp., in which Telekom already holds a 10 percent stake, has a market value of more than $42 billion, for example.
Telekom also my seek to buy U.S. companies with a strong presence in data and Internet communications, analysts said.
The company's shares fell 1.61 euros, or 4.3%, to 36.14 on concern a 10% increase in shares outstanding will dilute the value of existing stock, analysts said.
A final price for the shares will be set June 25 or 26. They start trading June 28.
The German company said it will sell shares to global institutional investors and, for the first time, to individual investors throughout the 11-nation Eurozone.
Telekom said it will offer a 1-for-10 bonus issue for individual investors who subscribe by June 15. The company said it expects more than 50% of the issue to be taken by retail investors, who will be able to buy shares at a discount of between 2 and 5%. The incentives will be given to individual investors throughout Europe, not just in Germany.
"We want to ensure that each shareholder has the same chance," CFO Kroeske said.
Deutsche Telekom's offer for Telecom Italia, meanwhile, remains mired in uncertainty over whether it will gain approval from European Union regulators and the blessing of Telecom Italia shareholders, which include the country's government.
The European Commission, the EU's executive agency, has approved the Olivetti bid without conditions, but said the German plan will face a full five-month probe.
Though the German government, Deutsche Telekom's biggest shareholder, won't exercise its rights in the share sale, its reluctance to speed up the sale of its 72% stake or limit its voting rights remains a potential sticking point in the success of Telekom's offer for the Italian company. Italy may block Telekom's offer for Telecom Italia if the German government retains control of the combined company, according to a directive signed by Prime Minister Massimo D'Alema.
Germany agreed not to sell shares before June of next year, Telekom said. The share sale will dilute the German government's stake, though it will retain a majority of more than 65%.
Telekom sold 713 million shares for about 20 billion deutsche marks at the end of 1996.
Copyright 1999, Bloomberg L.P. All Rights Reserved.
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