According to reports in Italian broadsheet Il Sole/24 Ore, Telecom Italia is planning to buy the 44% of its wireless arm Telecom Italia Mobile (TIM) it does not already own, in a move which is expected to cost it EUR20 billion in cash and shares. The purchase will bring together two companies that were separated in 1995, when TIM was spun-off from the parent company. According to the Financial Times the Telecom Italia board will meet tomorrow to finalise the details of the offer. TIM’s board also meets tomorrow, as do those of the tangle of companies surrounding the telcos, which include tyre manufacturer Pirelli and holding company Olimpia.
It is suggested in the Italian press that Telecom Italia shareholder Olimpia will seek to maintain an equivalent shareholding in the merged company by investing an additional EUR2 billion. Olimpia is roughly 50% owned by Pirelli (also under the leadership of Telecom Italia Chairman Marco Tronchetti Provera), with the Benetton family owning around 17% through investment company Edizione Holding. The country’s two largest banks Banca Intesa and UniCredito Italia both own 8.4%, with the remainder held by financier Emilio Gnutti through his investment company Hope.
The Italian decision to buyout minority shareholders from core businesses follows a spate of similar deals in recent months across Europe. Just last week BT agreed a deal to acquire 100% of its Italian corporate provider Albacom, while France Telecom spent EUR6.6 billion on the rest of its wireless arm Orange in April. Deutsche Telekom, meanwhile is in the process of offering EUR2.9 billion for the remainder of its internet unit T-Online International.