Into the hornets' nest

13 May 2003 By Hugo Dixon Follow @hugodixon

Liverpool plausibly argues Olivetti should be prevented from voting its TI stake and, instead, forced to launch a takeover. Shareholder actions in Italian courts usually don’t get far. But even if this action fails, shareholders are opening other fronts.

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Liverpool, a hedge fund, has launched an action in the Milan tribunal in an attempt to block Olivetti's planned merger with Telecom Italia.

The group said it was seeking an injunction blocking Olivetti from voting its shares in TI and blocking Olimpia, another holding company, from voting its shares in Olivetti ahead of the extraordinary general meetings being held on May 24 to approve the TIOlivetti merger.

Liverpool said that it believed Olimpia was currently in possession of more than 30% of Olivetti's voting rights and should therefore be required under Italian law to make a takeover bid for both Olivetti and TI.

The hedge fund said that when Olivetti shares owned by Olivetti itself are taken into account, Olimpia's stake in the group was 30.4%. It also said that a further 5.5% stake in Olivetti had effectively been parked with CDC Ixis. Liverpool has also written to Consob, the Italian stock market regulator, complaining about the proposed merger.

Liverpool's actions are the latest by disgruntled TI shareholders trying to block a merger which they believe disadvantages them. Deminor, which represents a group of TI shareholders, said it was launching regulatory and legal actions in Italy and the US. It did not specify what these were.

Olimpia is confident that its stake in Olivetti is below 30% and vetted this with Consob, the stock market regulator, according to a person familiar with its thinking.

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