The increased offer, which Olivetti stressed was its final bid, is conditional on Telecom shareholders rejecting all the poison pill defence mechanisms being proposed by Franco Bernabe, Telecom's managing director.
The cash, bonds and shares offer values Telecom shares at 11.5 euros each, compared to the previous offer of 10 euros. The new bid is more than 50 per cent above the Telecom share price when rumours of Olivetti's bid first started circulating.
Roberto Colaninno, Olivetti's chief executive, said the offer was the group's final offer. "You don't start by giving your definitive offer straight away, but I can tell you that this is now our definitive offer," he said.
Olivetti's move comes just two days after Telecom announced plans to spend 23bn euros in cash buying the 40 per cent of Telecom Italia Mobile, its mobile subsidiary, that it doesn't already own. Telecom had planned to offer shares for the stake, but switched its bid to cash after shareholders' pressure.
The plan, which needs approval from 30 per cent of shareholders at a meeting scheduled for end-April, would increase Telecom's size, making it impossible for Olivetti to fund a bid. But Karel van Miert, European competition commissioner, yesterday cast further doubt over Telecom's plan when he said an integration of the fixed line and mobile businesses would raise competition problems.
Olivetti's new offer consists of 6.92 euros in cash and 2.90 euros in bonds for each Telecom share, with shares in the Olivetti subsidiary Tecnost accounting for the balance.