If Olivetti is victorious, Bernabe pockets pounds 8m

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THE CHIEF executive of Telecom Italia, Franco Bernabe, is in line for an pounds 8m pay-off should Olivetti's pounds 40bn bid for the company succeed when the offer closes this Friday.

The existence of the "golden parachute" emerged as doubts grow over prospects for the agreed merger between Telecom Italia and Deutsche Telekom.

Mr Bernabe has only been with Telecom Italia for eight months, having been brought in from the state-owned Italian oil group ENI. He is on a three-year rolling contract and is being paid 8bn lire (pounds 2.7m) a year. It is not clear when his contract was finalised or whether it pre-dates the launch of the Olivetti bid.

The Deutsche Telekom-Telecom Italia merger would create the third-biggest telecoms operator in the world with a market cap of 162bn euros (pounds 106bn).

But it has been facing increasing political opposition in Italy as the German government would emerge with a 40 per cent stake in the new business.

When the all-share merger was first announced last month it valued Telecom Italia at 12.03 euros a share, against the 11.5 euro a share cash offer from Olivetti. But since then the Deutsche Telecom share price has fallen, making its offer worth less than that of Olivetti. Earlier this week Deutsche Telekom decided not to raise the offer.

In another sign the merger with Deutsche is on the rocks, the German Chancellor, Gerhard Schroder, and his Italian counterpart Massimo D'Alema, avoided talking of it at a meeting in Bari to discuss Kosovo.