Pirelli and Benetton grab Telecom Italia

NEWS Pirelli and Benetton have seized control of Europe's fifth largest Telco, Telecom Italia, by buying a controlling stake in Olivetti. In a complex agreement, the two companies will gain control of Telecom Italia and its mobile arm TIM by paying E7bn (£4.3bn) in cash for the 23 per cent stake in Olivetti. Olivetti is owned by Bell, an Italian holding company controlled by Telecom Italia chairman Roberto Colaninno. Bell accepted the offer, ignoring Colaninno's claims that the beleaguered telco would be more valuable in the future. It was only two years ago that Colaninno instigated and oversaw a hostile takeover of Telecom Italia through Olivetti for E60bn (£37bn). This morning the Milan bourse suspended trading with all listed companies connected with Olivetti and Pirelli, pending further announcements about the deal. Pirelli (which will own 60 per cent of the new holding company) and Benetton (40 per cent) already owned three per cent of Telecom Italia. Now by taking the controlling stake in Olivetti they effectively have complete control of Telecom Italia, in which Olivetti holds a 54 per cent stake. Olivetti confirmed in a statement that Calaninno will resign and be replaced by Enrico Bondi, the current CEO of agriculture and energy group Montedison. Also Marco Tronchetti Provera, Pirelli's chairman, will now become chairman of Telecom Italia and in an interview to the Italian press yesterday he said the primary objective will be to lower Olivetti's E18m (£11m) debt.