Telecom Italia S.p.A.
Telecom Italia S.p.A: Ad-hoc-Release in accordance with §15 Abs. l (Page 1 of 2)
Ad-hoc-announcement processed and transmitted by DGAP.
The issuer is solely responsible for the content of this announcement.
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Page 1 of 2 – Ad-hoc-Release in accordance with § 15 Abs. l
German Securities Trading Act (WpHG)
Integration Tim/Telecom Italia
Telecom Italia S.p.A., 2, Piazza degli Affari, Milan, Italy
The proposed cash tender offer for a portion of the TIM ordinary shares and
all of the TIM savings shares described herein is not being made and will not
be made, directly or indirectly, in or into the United States, Canada, Japan,
Australia or any other jurisdiction in which the tender offer would require
the authorization of the relevant regulatory authorities or would violate
applicable laws or regulations.
Except as provided below, any offer to purchase or sell securities described
herein is not being made, directly or indirectly, in or into, or by the use
of the mails of, or by any means or instrumentality (including, without
limitation by mail, telephonically or electronically by way of internet or
otherwise) of interstate or foreign commerce, or any facility of any
securities exchange, of the United States of America and any such offer will
not be capable of acceptance by any such use, means, instrumentality or
facility.
The information contained herein does not constitute an offer of securities
for sale in the United States or offer to acquire securities in the United
States.
The Telecom Italia securities referred to herein in connection with the
merger have not been, and are not intended to be, registered under the U.S.
Securities Act of 1933 (the Securities Act ) and may not be offered or sold,
directly or indirectly, into the United States except pursuant to an
applicable exemption. The Telecom Italia securities are intended to be made
available within the United States in connection with the merger pursuant to
an exemption from the registration requirements of the Securities Act.
Milan, December 7, 2004 – The Telecom Italia and TIM Boards of Directors have
examined and approved a plan for the integration of the two companies that
has as its objective the simplification of the Group’s ownership structure
and the optimization of the financial and capital structures of the Group
resulting from the merger, against a backdrop of rapid technological development
that is opening the way to a significant increase in business
efficiencies.
The integration process foresees:
– A partial voluntary cash tender offer by Telecom Italia for 2,456,534,241
TIM ordinary shares, equivalent to 2/3 of the ordinary share free float,
and for all 132,069,163 TIM savings shares;
– The merger by incorporation of TIM into Telecom Italia once the transfer
of TIM’s domestic mobile business arm to a company 100% owned by TIM has
been completed (see attached diagram). The merger will occur following
the payment of dividends that are expected to be at least in line with
last year. In defining the terms of the above reorganization, the Boards
of Directors of the two companies have sought the opinions of external
advisers.
Specifically:
– Telecom Italia has been advised by JP Morgan, MCC and Mediobanca as Lead
Advisors;
– TIM has been advised by Lazard as Sole Lead Advisor and Credit Suisse
First Boston.
Further, in line with international best practice, and at the request of the
relevant Committees for Internal Controls and Corporate Governance that are
constituted only by independent Board Members, the companies have appointed
Goldman Sachs (for Telecom Italia) and Merrill Lynch plus the Studio Casò
(for TIM) to provide fairness opinion on the terms of the transaction.
Telecom Italia/TIM merger
The integration of the two companies is a strategic, business-led response to
the integration of fixed-line and mobile telephony platforms.
There is growing customer demand for seamless use of services made possible
by new technologies, and that are unrestricted by geographical location.
Driven by the accelerated take-up of broadband over fixed lines and EDGE/UMTS
over mobile lines, technological advances are not only breaking down the
barriers between different networks, but are bringing about a convergence
between telecommunications services and other sectors such as computers,
media and consumer electronics. Major equipment and terminal manufacturers
are shifting their technology investments towards catering to new customer
demand, and in recent months have brought to market their latest product
advances. The telephone networks is rapidly evolving into a “multimedia
network” as IP protocol becomes more widely implemented and multiservice
platforms are adopted on both fixed and mobile systems. The latest multifunction
devices offer access to both fixed and mobile services.
The Telecom Italia Group has long been at the forefront in Europe in terms
of growth, profitability and innovative customer offerings. Major investment
programs have equipped the Group with a leading edge network infrastructure
ready for next-generation products and services.
An evolving marketplace and the key objective to create value for the Group’s
shareholders require that the Group’s business models and strategic
orientation, adapt to the changing environment and this has driven the
project to incorporate TIM into Telecom Italia.
A reorganization of the Group’s structure is necessary to capture fully, at
a time of major technological change, the benefits of integration between
platforms and services and to ensure a consistent approach to management of
the business, something that partial control of a company does not
facilitate.
The Group’s objective is to be in a position to cater to customer demand for
integrated telecommunications services and enhance the complementary nature
of the services it offers in order to promote usage and reap the benefits of
cross-business synergies.
Cash tender offer
The offer price is equal to 5.6 euros per ordinary share and 5.6 euros per
savings share and includes a premium of about 8% over the market price at
close of trading on Friday December 3, 2004 for ordinary shares and about 4%
for savings shares. Compared with the market price on November 3, 2004, the
premium corresponds to about 19% for ordinary shares and about 21% for
savings shares.
The cash offer is targeted on 2,456,534,241 ordinary shares, corresponding to
two thirds of outstanding ordinary share free float, and to 100% of the TIM
savings shares in circulation. The tender will proceed if at least two thirds of
the shares that are subject to the offer, both ordinary and savings shares,
accept the offer. This level of acceptance has been determined in order to avoid
any dilution of the financial returns per share for all Telecom Italia
shareholders after the merger.
Telecom Italia will meet the cost of the maximum cash outlay as a result of
the tender offer of a total amount of 14.5 billion euros, via a financing of
a maximum of 12 billion euros provided by a pool of banks led by JP Morgan as
Global Coordinator, and Banca Intesa, MCC, Mediobanca and Unicredito Italiano
as Mandated Lead Arrangers. The remaining 2.5 billion euros will be drawn
from Telecom Italia’s own liquid resources which, at November 30, 2004,
totaled 7.5 billion euros, with the expectation that these resources will
increase to around 8.8 billion euros by the end of the year.
If the offer is fully successful, the net consolidated debt of the Group would
rise to a just over 44 billion euros. This figure is considered to be
sustainable in view of the post-merger Telecom Italia financial structure,
taking into account enhanced cash flow, increased assets value and higher
market capitalization. Despite increased level of debt the company’s post-
merger rating (currently Baa2 for Moody’s, BBB+ for Standard&Poors, A- for
Fitch) is very unlikely to be affected.
end of Page 1 of 2
end of ad-hoc-announcement (c)DGAP 07.12.2004
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WKN: 120470 ; ISIN: IT0003497168; Index:
Listed: Amtlicher Markt (General Standard) in Frankfurt; Freiverkehr in Berlin-
Bremen, Düsseldorf, Hamburg, Hannover, München und Stuttgart
071926 Dez 04
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