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To: Greg B. who wrote (23139)	2/20/1999 3:17:00 PM
From: brian h	Read Replies (1) \| Respond to of 152472

Thanks Greg B. All, Hmmmm. A small fish is biting a shark. WCOM style in Euope. Olivetti Offers EU52.6 Billion for Telecom Italia; Plans to Sell Omnitel Rome, Feb. 20 (Bloomberg) -- Olivetti SpA, Italy's No. 2 phone company, said it offered 52.6 billion euros ($59 billion) in cash, stock and bonds for its bigger rival Telecom Italia SpA in what would be the largest ever takeover in Europe. Olivetti will pay 10 euros a share for Telecom Italia's common stock, a 10.5 percent premium on Friday's closing price. The offer, made through its Tecnost SpA unit, includes 6 euros in cash, 2.6 euros in bonds and 1.4 euros in shares. Olivetti will also sell its existing phone businesses due to antitrust laws. The first hostile takeover attempt for one of Europe's former state telephone monopolies, the bid would turn Olivetti, a newcomer to the industry, into one of its top ten companies. The offer was timed to pre-empt a counter-move from Telecom Italia, whose board is meeting to seek a way to block the bid. ''This bid is a financial bomb introducing changes we couldn't even imagine before and bringing the American-style culture of takeovers to the cozy Italian market,'' said Patrizio Pazzaglia, who manages $90 million at Nusa SIM in Rome. Olivetti, whose market value is seven times smaller than Telecom Italia's, said it will sell its existing phone businesses to Germany's No. 2 phone company Mannesmann AG. The sale, which would quell antitrust concerns and finance the Telecom Italia acquisition, could take place even before the takeover is completed, the company said. Joint Ventures Olivetti owns 50.1 percent of a joint venture with Mannesmann that controls Europe's No. 2 mobile phone company, Omnitel Pronto Italia SpA, and Italian fixed-line phone company Infostrada SpA. The takeover bid, initially scheduled to be discussed at Olivetti's board meeting Sunday afternoon, was made just half an hour before Telecom Italia's board started a meeting on Saturday to discuss counter-moves, such as merging with its Telecom Italia Mobile SpA cellular unit. ''Now the ball is in Telecom Italia's court,'' said Roberto Odierna, an analyst at Societe Generale in Milan. He said that Telecom Italia could respond by bidding for Olivetti. Olivetti said it intends to sell part of Telecom Italia's 60 percent stake in TIM, while keeping ''direct control'' over the cellular company, if its bid succeeds. ''At this point, Olivetti becomes a completely different company, to which we'll have to apply completely different valuations,'' said Paola Toschi, an analyst at AFV Milla SIM. The five-year Tecnost bonds offered as part of the purchase will have an investment grade rating from an international agency and will be backed by Olivetti. The yield will be similar to comparable bonds, the company said. Italian Lottery The shares that will be offered as part of the purchase will come from a share sale by Tecnost, a separately traded Olivetti unit that makes equipment for lotteries. Olivetti said it will keep at least 55 percent of Tecnost. ''The price seems to be rather low, and I have doubts they will be able to pull it off,'' said Alessandra Cantu, an analyst at Banca Commerciale Italiana. ''It would be simpler for Telecom Italia or TIM to make a counter-bid for Olivetti.'' Olivetti said it will secure guarantees from Italian and foreign banks for the entire amount of the offer, which specifically excludes U.S. residents and needs 67 percent acceptance to succeed. The company isn't offering to buy Telecom Italia's non-voting savings shares. Olivetti is being advised by Lehman Brothers Inc., Mediobanca SpA, Chase Manhattan Bank and Donaldson, Lufkin & Jenrette. The takeover plan is made possible by the opening of Europe's telecommunications market to competition last year, a change that allowed new phone companies like Olivetti and Mannesmann to challenge former monopolies such as Telecom Italia and Germany's Deutsche Telekom AG. Telecom Italia's Chief Executive Franco Bernabe, appointed only last November, may try to counterattack by bringing in a foreign ally like AT&T Corp. or British Telecommunications Plc, Pazzaglia said.