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To: Pas who wrote (11019)	4/28/1999 8:39:00 AM
From: zbyslaw owczarczyk	Respond to of 18016

Telecom Italia deal teeters Report: TI's board orders bankers to keep options open amid snags in DTel deal April 28, 1999: 7:04 a.m. ET LONDON (CNNfn) - Telecom Italia's board has ordered its bankers to explore options aimed at warding off Olivetti's $64 billion hostile bid for the company, according to a published report Wednesday. The company is reportedly fearful that bickering politicians may lay waste to its blockbuster merger plans with Germany's Deutsche Telekom. Those options include a leveraged recapitalization plan under which an Italian shell company would be used as a vehicle to launch a bid for Telecom Italia, The Wall Street Journal reported Wednesday. "The plan is there, ready to be mobilized," a source close to the matter told the newspaper. Telecom Italia refused to comment to CNNfn on the report, although it did confirm its board had officially rejected Olivetti's offer. News of the feverish scrambling by Telecom Italia comes just two days before Olivetti is expected to formally launch its hostile bid. TI has vowed to fight the takeover effort by the former typewriter maker, a company a mere fraction of its size. TI's $82 billion alliance with Deutsche Telekom, unveiled on neutral ground in London on April 22, was supposed to provide the perfect antidote to the unsolicited bid. Instead, the deal that would be the largest corporate merger is turning out to be the European business world's biggest corporate imbroglio. Fierce lobbying Deutsche Telekom and Telecom Italia, led by their respective chiefs, Ron Sommer and Franco Bernabe, have been lobbying fiercely to overcome resistance to the deal in both Rome and Frankfurt. Telecom Italia struck its agreement with Deutsche only after the Italian finance Ministry secured assurances from the Bonn government that it would not interfere with a combined company. The Germans also pledged to shed or reduce their 72 percent stake in Deutsche Telekom. Nonetheless, the German government would control 40 percent of the combined telecom company. The Italians say such a large stake will leave the merged company vulnerable to German political influence. Rome has therefore pressed Germany to suspend its voting rights in the combined entity - a proposal Germany has dismissed as unworkable. Investors shrugged Investors, wary of the daunting cultural, political and managerial hurdles inherent in the cross-border alliance, greeted initial news of the deal with a shrug. The Journal said Bernabe was set to meet with government leaders Thursday to try to persuade them of the merits of the deal. The newspaper said the meetings follow high-level talks on Tuesday in Frankfurt between German and Italian Treasury officials. Separately, Olivetti said Tuesday that a memorandum of understanding between Telecom Italia, News Corp. and other parties concerning the sale of TI's Stream digital-T.V. unit looks like "an action of obstruction against Olivetti's bid." --from staff and wire reports