Telecom Italia S.p.A.
Telecom Italia S.p.A – Page 2 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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Telecom Italia S.p.A – Page 2 of 2
Merger structure and description – transfer
The integration of TIM into Telecom Italia will proceed following the transfer
of TIM’s domestic Italian mobile telephony business to a 100%-owned TIM
subsidiary (TIM’s holdings in companies outside Italy are already held by TIM
International, a wholly-owned TIM subsidiary).
This part of the business will remain a separate legal entity pursuant to
regulatory and accounting needs. As the transferer company will be taking
over TIM’s licenses for the provision of mobile telephony in Italy, this
solution satisfies requirements for transparency in the regulatory accounting
of fixed and mobile operations.
At the time of the merger TIM will wholly own TIM International and the
company to which the domestic Italian mobile telephony operations will be
transferred. After the merger, Telecom Italia will have 100% ownership of
both companies’ share capital.
Merger structure and description – merger
The formal process will commence once the cash tender offer has been
successfully completed.
Best practice valuation methodologies and procedures have been followed in
determining the exchange ratio.
In particular, the following valuation methods have been applied:
1) sum-of-the-parts method to value Telecom Italia’s activities, including
TIM, principally by applying the Discounted Cash Flow method;
2) a market value approach, examining relative share exchange values
expressed by the stock market over a variety of periods.
In accordance with advisors’ indications and recommendations, the following
exchange ratio is proposed:
– 1.73 Telecom Italia ordinary shares for every TIM ordinary share;
– 2.36 Telecom Italia savings shares for every TIM savings share.
As there are no grounds for changing the company purpose, no right of
withdrawal applies.
Merger timetable
On the basis of initial assessments, the restructuring plan timetable is as
follows:
– Offer launch in early January 2005 (following a TIM Board Meeting to
approve the issuer’s notification); closure of the offer period and
publication of the offer results by the end of January; payments to be made
within five working days of closure of the acceptance period;
– If the tender offer is successfully completed, Board approval of the merger
plan immediately after conclusion of the tender offer acceptance period;
– Calling of Shareholder Meetings to approve the merger in March;
– Completion of the merger process in time for the merger to become effective
in the second half of 2005, following the transfer of TIM’s domestic
Italian mobile services.
The company’s 2005 calendar of events, as announced in November, remains
unchanged. Any modifications will be announced in due course.
The merger described herein relates to the securities of two foreign
(non U.S.) companies. The merger in which TIM ordinary shares and savings
shares will be converted into Telecom Italia shares is subject to disclosure
requirements of a foreign country that are different from those of the United
States. Financial statements included in the document, if any, will be
prepared in accordance with foreign accounting standards that may not be
comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have
arising under the U.S. federal securities laws, since Telecom Italia and TIM
are located in Italy, and some or all of their officers and directors may be
residents of Italy or other foreign countries. You may not be able to sue a
foreign company or its officers or directors in a foreign court for
violations of the U.S. securities laws. It may be difficult to compel a
foreign company and its affiliates to subject themselves to a U.S. court’s
judgment.
Telecom Italia S.p.A.
WKN: 120 470; ISIN: IT 000 3497168; listed: Amtlicher Markt (General
Standard), Frankfurt Stock Exchange
End of ad-hoc-announcement Page 2 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
071925 Dez 04
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