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Olivetti's Carlo De Benedetti: The man who won't quit centre stage

Olivetti strongman Carlo De Benedetti is clinging to power at the company he has dominated for 17 years. Stripped of all executive titles and controlling only a 15% stake, he remains very much in charge. UK and American fund managers who thought the Italian corporate was a turnround stock with new go-ahead management have been rudely shocked. The share price has halved as bad news has heaped up. They now realize that De Benedetti doesn't care how low the stock goes as long as he wins the fight against them. As they slug it out, foreign investment in Italy suffers. Peter Lee reports

On August 27, worried representatives of seven UK fund managers met at the London offices of Baring Asset Management at 155 Bishopsgate. They had all bought sizeable chunks of Olivetti stock at the start of the year ­ most in an internationally syndicated rights issue ­ paying around L1,000 ($0.65) a share. In total they held a 25% stake. They had believed that a turnround at the troubled Italian information technology group would soon boost its share price, which had fallen from nearer L3,000 at the start of the 1990s. They had been bitterly disappointed.

Instead of turnround, the company had delivered profit warnings and growing management turmoil. The shares were down to L800. Shareholders were now cursing themselves for buying Olivetti stock and privately complaining that they had been misled at the time of the January 1996 rights issue.

"It was not so much a question of having being fed inaccurate information in the rights-issue prospectus, which nobody really read anyway because they are always full of legal gobbledygook," says one fund manager who attended the meeting. "It was the enthusiasm of investment banking analysts and the company for the turnround story which was misleading."

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