Olivetti Announces Bid for $58-Billion Takeover

Olivetti SpA, Italy’s No. 2 phone company, announced a $58-billion hostile takeover bid Saturday for rival Telecom Italia in what would be Europe’s biggest telecommunications deal ever.

Olivetti’s bid was made public in a five-page filing to the Italian stock market regulatory body, Consob.

Telecom Italia, a former state monopoly, is the world’s sixth-largest phone company but has endured three management shake-ups in the past 18 months.

Earlier Saturday, the Italian news agency ANSA reported that Telecom Italia’s cellular subsidiary, Telecom Italia Mobile, might make a takeover bid for the parent company to block the expected takeover bid.

Olivetti on Friday announced that its board would meet today to review a “strategic investment” regarding Telecom Italia.

Sources have said that Olivetti, which only has $9 billion available for the takeover, would raise about $10 billion by selling its existing phone company investments in Infostrada and Omnitel to Germany’s Mannesmann AG. Olivetti and Mannesmann control those two via a holding company.

The four banks advising Olivetti are expected to submit a letter today to Olivetti declaring that they are “highly confident” that they can raise the necessary funds.

Rumors about a possible deal have been building over the past two months.

Last month, Olivetti said a report that it was planning to buy Telecom Italia was “unfounded and impracticable.”

Consob is now evaluating Olivetti’s denial in light of developments and also said it had opened an inquiry into insider trading of Telecom Italia shares after a large block changed hands Thursday.