Telecom Italia shares up on reports of German merger
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Your support makes all the difference.SHARES IN Telecom Italia jumped yesterday on reports that Deutsche Telekom, the state-owned German operator, was preparing to rescue it from a hostile bid by Olivetti, the former typewriter group, with a $200bn merger.
Both companies refused to comment on the report, which boosted Telecom Italia shares 3 per cent. The Italian group has made little secret of its desire to attract a white knight bidder since an attempt to trigger a poison pill defence against Olivetti's hostile bid. Apart from Deutsche, British Telecom, Spain's Telefonica and the US group Sprint have all been named as potential bidders.
Both the Italian and the German governments claimed no knowledge of the talks. However, they would both play a large role in any link-up if it were to go ahead. As a 74 per cent shareholder in Deutsche Telekom, the German government would have to formally approve the merger. Meanwhile, the Italian government has a golden share in Telecom Italia allowing it to block any unwanted bid.
Analysts pointed out that any merger between the two companies would raise huge regulatory barriers. Deutsche would have to unwind its close alliance with France Telecom, which has seen the companies take shares in each other and make joint investments in other European countries.
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