Telecom Italia has rejected Olivetti's second revised hostile takeover bid and asked Italian regulators to study the new offer, branding it "full of holes" from an industrial and legal standpoint.
At the same time, the telco also charged Franco Bernabe, its managing director, with the task of evaluating the possibility of merging the parent company with its mobile phone unit, Telecom Italia Mobile, to raise the value of the group out of Olivetti's reach.
The Italian regulators, Consob, rejected Olivetti's first proposal on Monday, but have agreed to review the second and are expected to come out with a response by Friday.
Olivetti rushed to file its revamped offer on Thursday to try and block any defensive moves by Telecom Italia, but did not change the deal's basic original financial content, valuing any takeover attempt at about $58 billion (52.55 billion euros).
Instead the hardware supplier said it planned to launch its tender offer in April and formally signed a conditional contract to sell its stake in cell phone operator, Omnitel Pronto Italia, and fixed line operator, Infostrada, to Germany's Mannesmann for $8.4 billion.
According to reports in the Wall Street Journal, the boards of Olivetti and Tecnost - the Olivetti subsidiary that is being used as the vehicle to launch the bid - also approved two capital increases for five trillion and 21 trillion lire respectively.
Plans to issue as much as eight trillion lire in new convertible bonds, or eight trillion lire in common stock were also passed.
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