25 May 2000

Italy's leading internet portal, Tin, could be thwarted in its bid to acquire its rival Seat. In a complex deal Tin’s parent, Telecom Italia, had undertaken to buy-up any unpledged Seat shares at €4.2 each, gambling on the [then] unlikely risk that that it would have to honour its undertaking.

But following the recent collapse of internet shares across Europe, Seat shares have plummeted from their earlier price of nearly €8 euros, resulting in a possible payout of as much as $14bn by Telecom Italia to Seat shareholders. Such a sum would force TI to draw down much of the borrowing it made on European markets earlier this year following its controversial and debt-laden takeover by Olivetti. Such a move would threaten TI's own credit rating.

The combined company – if the labyrinthine deal goes through - could be worth as much as $40bn, making it Europe's largest internet operation.

News source: BBC Online Business News (UK)