Telecom Italia To Offer EUR5.6 For Each TIM Share

MILAN -(Dow Jones)- Italian phone company Telecom Italia SpA (TI) said Tuesday it will offer EUR5.6 for each ordinary and savings share in its mobile unit Telecom Italia Mobile SpA (TIM.MI).

It said the offer, which will start in January, will be for two-thirds of the shares of TIM it doesn't already own, and for all of the TIM savings shares.

After the offer, Telecom Italia will merge with TIM to form a single company. The new company, however, won't include TIM International NV, which will become a separate company. TIM International is holds stakes in TIM's Latin American units.

"This merger will enable the new company to take advantage of the dividend flow, which is seen at least in line with the previous year," said Telecom Italia in a statement.

The offer price of EUR5.6 is an 8% premium to TIM's ordinary share price as of Dec. 3, the company said, and 4% premium for savings shares.

The offer, which may cost as much as EUR14.5 billion, will be financed by EUR12 billion provided by a pool of banks coordinated by JP Morgan.

"The offer is conditional upon reaching two-thirds of the shares of each category subject to the offer," the company said.

Telecom said that the merger with TIM will take place after the buyout is completed.

Telecom will swap 1.73 of its ordinary shares for each TIM ordinary share, and 2.36 of its savings shares for each TIM savings share.

In the event that the offer is taken up in full, Telecom's group debt will rise to just over EUR44 billion from a target of below EUR30 billion at the end of 2004.

-By Jennifer Clark, Dow Jones Newswires; 39 02 58 21 9904; jennifer.clark@dowjones.com

(END) Dow Jones Newswires "

Posted to the site on 7th December 2004