It is not just the fact that Olivetti’s $28bn purchase of Telecom Italia was the second-biggest M&A deal of 2003 that makes it stand out. It had to overcome numerous shareholder obstacles.
The merger of Telecom Italia and Olivetti was achieved by exchanging Olivetti stock (seven-to-one exchange ratio) for the 45% of Telecom Italia that Olivetti did not already own, plus an eventual voluntary partial tender offer of Telecom Italia ordinary shares and savings shares and a e9bn credit facility to Olivetti to cash out eventual withdrawal rights and the tender offer.
Safeguarding the interests of all categories of shareholder, for both Telecom Italia and Olivetti, meant matching the Olivetti withdrawal right with the voluntary partial tender offer on Telecom Italia ordinary and savings shares, and maintaining or improving the credit rating of the combined firm, considering the additional debt of as much as e9bn.
