Word: olivettis
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...Colaninno looked as if he was making history when he launched his hostile takeover of Telecom, then the largest such deal in Europe. While not unknown in Italian business circles, he had neither the clout nor the name of the man he had replaced at Olivetti, Carlo De Benedetti. But with the help of Cuccia and the center-left government of Massimo D'Alema, which gave a green light to the takeover, Colaninno threw a wrench into Italian family-style capitalism. And in the process, he managed to step on the feet of De Benedetti and the Agnelli family...
...ascent was short-lived, as he turned out to be unlucky in his alliances. Cuccia died, and D'Alema was forced to resign as Prime Minister, only to be eventually succeeded by Berlusconi this spring. Then the market turned against Colaninno in March, punishing the share prices of Olivetti and Telecom Italia, and causing some concern among Colaninno's investors, largely 175 businessmen from Mantua who had backed him in the hopes of a quick return on their money. No new investors were on the horizon, and a plan to raise $8 billion in cash through a conversion of savings...
...curtain was about to fall for Colaninno. Pirelli and Benetton put together a $6 billion package that allowed them to buy 23% of Olivetti, which in turn owns 55% of Telecom Italia. Since they already owned nearly 4% of Olivetti, their share rose to 27%, with which they can control the telecom giant. Tronchetti Provera, who is credited with turning around Pirelli, had been sitting on $3.2 billion in cash after selling two optical technology firms to Cisco and Corning. For months the guessing game in Milan was what will Pirelli buy? "Telecom has a strong market position...
...alliance, apparently neutralizing concerns about French control. "The direct confrontation between Fiat and Mediobanca is something we have never seen before in Italy," says Marco Bolgiani of Eptafund in Milan. But the onetime friends have had a few subterranean run-ins over the years. For example, the bank supported Olivetti's successful 1999 bid for Telecom Italia, which Fiat opposed. Still, the notion of a vendetta shouldn't be overplayed: shares in a company called HdP, whose investments include the newspaper Corriere della Serra and the designer Valentino, shot up briefly this month on hopes that Fiat might lead...
...other great winners are Europe's shareholders. As one analyst pointed out, no matter whether Olivetti or Telecom Italia's management prevails in their battle, Telecom's shareholders have already earned a nice premium. Europe's cosseted work force, on the other hand, has not yet fully come to grips with what those investment banking euphemisms like "synergies" and "restructuring" can mean. As their American union counterparts discovered a decade ago, mergers will make Europe's largest firms more efficient and competitive, but they will do so by shedding thousands of jobs. And in Europe, where unemployment levels are more...