Telecom Italia chief to quit as Olivetti secures victory
"I confirm that I will propose myself as chief executive, but it will then be up to a shareholders' and board meeting," Mr Coloninno said in Milan.
Mr Bernabe's resignation is due on Tuesday at the latest when Telecom Italia's board meets. Mr Bernabe is due to meet Mr Coloninno on Monday.
"There's been a lot of drama since we launched the bid," said a source close to Olivetti. "But we've kept to our plan. We'll go on keeping to our plan."
Mr Coloninno has vowed to make Telecom Italia, privatised in 1997, a more aggressive player in the $500bn-a-year European telecommunications market. This market is growing rapidly and generating high share prices as telecoms, computing and media technologies converge.
Olivetti is expected to strip down Telecom Italia's multi-layered management and bring in senior industry executives from outside, a source said.
Olivetti's takeover is likely to have ripple effects on European business. Deutsche Telekom, which unsuccessfully put itself forward as white knight for the Italian phone giant, now looks weak beyond German borders. BT and new entrants to the industry like MCI WorldCom look strong by comparison.
Meanwhile, UK mobile phone company Vodafone now faces stiffer competition from German rival Mannesmann. To gain Brussels approval for the takeover, Olivetti agreed to spin off its Italian mobile phone assets to Mannesmann.
Less clear is what will happen to Telecom Italia's share price when the Milan market opens. Virtually all of its core Italian investors responded to Olivetti's tender. But many UK and US institutions, which hold around 30 per cent of Telecom Italia, held on to their shares. "We'll wait and see what the market does," said a spokesman for Standard Life Investments.
Olivetti ended up with 51.02 per cent of Telecom Italia's shares on Saturday. "This was just about perfect," said an observer. "Coloninno gains control, but he has to raise the minimum amount of debt to do that."
Olivetti will draw down portions of the $7.5bn (pounds 4.7bn) blocks made available to it by Chase Manhattan, Lehman Brothers and Donaldson, Lufkin & Jenrette, as well as the $1bn made available by lead Italian adviser Mediobanca. It has secured this debt against Telecom Italia's future cash flow.
"I don't think you'll see Olivetti bothering with buying more shares any time soon," said an adviser. "They don't need them. Further purchases would only add to the debt."
Fallout from the takeover could hit other sectors. Olivetti has smashed a gentleman's agreement on the Continent against hostile bids, paving the way for others in industries from telecoms to financial services.
BATTLE OF THE BANKERS
Olivetti's victory in the battle for Telecom Italia also marks a stunning reversal for some of the world's top corporate financiers at the hands of less exalted rivals, writes Dan Gledhill.
Telecom Italia was advised by the cream of the investment banking world, notably Credit Suisse First Boston, Lazards and JP Morgan. An even bigger loser could be Goldman Sachs, which was advising TI's other suitor, Deutsche Telekom. Goldman was rumoured to be on a win-only bonus of $100m (pounds 62m).
On Olivetti's side, the outcome will be a bonanza for Chase Manhattan, Lehman Brothers, Mediobanca and Donaldson, Lufkin & Jenrette, which are expected to have an equal share of total fees up to pounds 400m.
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