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Olivetti: The sack of Telecom Italia

Every chief executive in Europe should heed the lessons of Telecom Italia's defeat. No company is beyond attack and the art of how to fight a hostile raider must be learned, or relearned, urgently. Olivetti's was a daring stroke, inspired by Roberto Colaninno's ambition and by a group of advisers each believing their improbable target was attainable. But its assault was as blunt and simple as a battering ram.

Above all, this was a battle lost by Franco Bernabè, the conscientious industrialist. His bankers wanted all-out war against Olivetti. Bernabè tells Euromoney exclusively why he held them back. He hoped a cogent industrial plan for tomorrow would carry more weight than windfall profits today for investors and banks. He tried to run the giant telecom firm as usual, recoiling from any measure he wouldn't have taken in the ordinary course of events. He didn't understand that takeover battles are extraordinary episodes - bare-knuckle fights where victory is the imperative.

In reconstructing the most important takeover contest of the decade, Euromoney reveals details for the first time of how the scheme was hatched. It appeared an impossibly audacious bid, but many separate groups independently had hit on the idea last year. Colaninno dreamed of leaping beyond Olivetti's limits; Lehman proposed a subtle grasping of control; Mediobanca a full-scale assault; DLJ was working on an LBO and then, crucially, Chase said it was financeable.

It is a story of tense moments previously untold: of how the crucial financing came to the brink of collapse; how Mediobanca, true to form, was more deeply involved than the other banks knew; of the fearsome defences proposed by CSFB and JP Morgan to which Bernabè said no.

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