Scots fight Telecom Italia bid

STANDARD Life Investments is mounting a campaign of major shareholders in Telecom Italia to block Olivetti's $58bn (pounds 37bn) bid for the company.

Edinburgh-based Standard Life, one of Telecom Italia's biggest investors, says the buyout will saddle Telecom Italia with debts, hampering growth.

Standard Life, which has about pounds 65bn in investments worldwide, last week started canvassing 28 Telecom Italia investors holding 12 per cent of the company in New York and the UK. Leon de Jerez, head of continental European equity investments at Standard Life, said many of the investors are considering supporting Telecom Italia's management in exchange for some promises to "unlock value'' by absorbing its mobile phone unit Telecom Italia Mobile.

These investors also suggest changing Telecom Italia's capital structure to eliminate its savings shares, by converting them to stock or buying them back.

Standard Life, whose head of corporate governance, Guy Jubb, was in New York meeting investors last week, is hoping to line up investors to sign a letter to be sent to Telecom Italia management outlining their requests in return for supporting chief executive Franco Bernabe in repelling Olivetti's bid.

"We don't necessarily see blocking Olivetti as a victory,'' said Mr de Jerez. "We still need to see a clear [industrial] plan from Telecom Italia.''

On Friday night, Telecom Italia's board of directors - which controls about 7 per cent of the stock - gave Mr Bernabe a mandate to defend the company from Olivetti, whose chief executive said he has no plans to raise the bid.

Telecom Italia's biggest shareholders include the California Public Employment Retirement System, Fidelity Investments, The Teachers Insurance and Annuity Association, College Retirement Equities, TRowe Price Associates, Merrill Lynch Asset Management and Capital Research Management.

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