AT&T;'s Talks With Olivetti Break Down
Olivetti and major shareholder American Telephone & Telegraph Co. have failed to negotiate a closer relationship under which AT&T; would have boosted its stake in the Italian computer maker, Olivetti said Monday.
In a 1986 pact, Ing C. Olivetti & C. Spa agreed to handle personal computer development for AT&T.; The accord also allowed the U.S. group to raise its current 22% stake in Olivetti, which is headed by business tycoon Carlo De Benedetti, to 40% in 1990.
Due to differences between the two companies, De Benedetti said in a statement, “it was decided that the present relationship between AT&T; and Olivetti be maintained whereby AT&T; remains at 22% ownership, considering that this is in the best interests of both companies.”
An Olivetti spokeswoman said that AT&T; cannot exercise the previous option to increase its Olivetti stake, which now will remain frozen at 22%. However, an AT&T; spokesman in New York said the 1986 accord, including the option to increase its stake, remained intact. AT&T; would not comment further on De Benedetti’s statement.
Sources close to De Benedetti’s group said AT&T; had asked the Italian executive several times in recent months to modify the current accord to allow it to hike its stake to 40% now rather than after 1990. The sources said AT&T; was willing to pay a price substantially above the current market value of Olivetti shares.
Prior to Monday’s announcement, rumors had surfaced periodically that the AT&T-Olivetti; alliance was not going smoothly. Olivetti has been said to be unhappy with the number of its computers AT&T; has been able to sell.
Sources said that the companies sought to reorganize their joint operations to better coordinate product development and marketing both in the United States and Europe.
“Recently AT&T; and Olivetti have had some discussions regarding a possible closer relationship between the two companies in line with the existing agreement,” the Olivetti statement said. The discussions, which centered around business and organization issues, showed significant basic differences, it said.
“Our absolute priority has always been to conserve the autonomy of Olivetti; this is for me irrevocable in my double role as shareholder of reference and chairman of Olivetti,” De Benedetti said.
“It is a point not open therefore to discussions, compromises or financial compensation,” he said.
De Benedetti added: “For our part, we intend to continue the alliance with AT&T;, provided that this does not put into discussion the fundamental identity values of the company.”
Olivetti also is involved in three-way discussions with Italy’s state-owned group STET Spa and AT&T; regarding a possible alliance in the telecommunications sector.
AT&T; is one of four foreign companies with which STET is considering a major accord in the telecommunications field.