The Board of Telecom Italia, meeting today in Milan under the chairmanship of Roberto Colaninno, gave final approval to the industrial and corporate integration plan between Tin.it and Seat Pagine Gialle. The agreement, signed by Roberto Colaninno, Chairman and Chief Executive of Telecom Italia, and by Lorenzo Pellicioli, Chief Executive of Seat Pagine Gialle, marks the creation of a leading European New Economy company.
The new company will be the only European player with a presence across the entire internet value chain, both in the consumer and in the market for small and medium sized businesses, and will be able to leverage off its unique range of resources, capabilities and activities in the provision of on-line services in addition to the traditional services offered by Seat Pagine Gialle.
The new entity will result from the combination of Seat Pagine Gialle, Tin.it and the following activities of Telecom Italia
- The 50% participation held by Telespazio in Viasat (telematic and satellite services for info-mobility);
- The content management division of Saritel (active in information services and access to databanks for professionals and small and medium sized businesses);
- The operational and advertising management of the official directory of telephone subscribers. Seat Pagine Gialle will also establish with Tim a 50/50 joint venture active in electronic commerce and content and service offerings. The object of the joint venture is to capitalise on the potential of new portals, of Wap technology and of the new UMTS technology. The joint venture will also be responsible for the Tim Sim card based payment methods.
A Key Player in the New Economy
The new Seat-Tin.it will be a leader in the market for internet access (with over 2.6 million subscribers) both in the free and payment segments and will include Italy´s most visited portals (over 180 million page views per month).
The new group will be a unique European integrated business to business platform, with a presence in every segment of the new economy as well as being the leader in the on-line advertising market, in telephone directories and in local advertising.
Seat-Tin.it will also include a distribution network of over 1,800 agents, of 1,200 Buffetti outlets (once the tender offer by Seat Pagine-Gialle has been concluded) and will have access to approximately 6,000 sales outlets used by Telecom Italia Group.
The scale and scope of these activities will position Seat-Tin.it to became a leading aggregator of content and a traffic and business solution provider, thereby maximizing the complementary nature of various businesses at the national and international levels.
Structure and Timetable for the Transaction
The integration plan will be carried out according to the following timetable:
- The transfer by Telecom Italia of its Tin.it division and of the other businesses which are the subject of the agreement to a 100% controlled company (Tin.it SpA);
- In order to guarantee ordinary and savings shareholders of Telecom Italia a privileged treatment under the transaction, Telecom Italia will undertake a partial demerger of approximately 8% of the capital of Tin.it SpA to Seat Pagine Gialle. In the context of this demerger, Seat Pagine Gialle will undertake a capital increase issuing new ordinary shares to be assigned in equal measure to ordinary and savings shareholders of Telecom Italia;
- A simultaneous merger through incorporation of Tin.it SpA and Seat Pagine Gialle, which will undertake a capital increase issuing new ordinary shares for the benefit of Telecom Italia.
The demerger and merger operations will be presented to an extraordinary meeting of shareholders in Seat Pagine Gialle expected to occur before the end of June. It is intended that the entire operation will be concluded by summer´s end.
The Exchange Ratio
The demerger and merger transactions will take place on the basis of a ratio between the economic values of Seat Pagine Gialle on one side and Tin.it and the other assets brought by Telecom Italia on the other, equal to 1 : 1, as agreed by the Boards of Telecom Italia and Seat Pagine Gialle, and approved by their respective advisers. In order to determine the exchange ratio it has been assumed that the value of each Seat Pagine Gialle savings share is equal to 70% of the value of each ordinary share.
Consequently Seat Pagine Gialle will issue between 4,851,958,735 and 5,100,570,235 new ordinary shares to Telecom Italia shareholders (in the context of the demerger) and to Telecom Italia (in the context of the merger). The exact number of shares to be issued will be determined by the level of participation in the Buffetti tender offer. Assuming that this is equal to 100%, at the conclusion of the integration with Tin.it the share capital of Seat Pagine Gialle will consist of 9,187,288,764 ordinary shares and 1,448,359,580 non convertible savings shares.
The Shareholder Structure
At the conclusion of the above transactions, and before the conversion of SPG savings shares into ordinary shares, Telecom Italia will have a participation equal to approximately 64% of the ordinary share capital of the new Seat Pagine Gialle-Tin.it entity. This figure takes into account:
- The agreement, signed by Telecom Italia with the current controlling shareholders of Seat Pagine Gialle, to increase up to 30% its participation in the ordinary share capital of Seat Pagine Gialle before the merger with Tin.it;
- The demerger in favour of Telecom Italia shareholders, who will hold 4% of the ordinary share capital of the new integrated entity. This will mean distributing 55 ordinary shares of the new Seat-Tin.it entity for every 1000 Telecom Italia ordinary or savings shares.
The Board reconfirmed its willingness to launch a voluntary tender offer for the entire ordinary and savings share capital of Seat Pagine Gialle (before the merger with Tin.it) at a price equal to 4.2 euros per ordinary share and 2.94 euros per savings share.
It was also confirmed that in the context of the integration plan Seat Pagine Gialle savings shares would be converted into ordinary shares at a value reflecting a discount of 30% to the price of ordinary shares. The terms and conditions of the conversion will be communicated as soon as the relevant decisions are taken.
All these transactions are subject to approval by the Italian Antitrust authority.
Matrix
The Board of Telecom Italia noted that Seat Pagine Gialle has signed a memorandum of understanding with De Agostini and negotiations are underway with minority shareholders of Matrix SpA, with the object of increasing to 100% the participation of Seat Pagine Gialle in Matrix. In particular, De Agostini will sell to Seat Pagine Gialle the participation it currently holds in Matrix through Webfin. In parallel De Agostini and Seat Pagine Gialle are announcing a joint initiative in professional publishing, tourism and the publication of encyclopedias. These initiatives will allow synergies between the editorial content of De Agostini and internet platforms of Seat-Tin.it.
The integration project of Tin.it and Seat Pagine Gialle will be presented to the financial community and press tomorrow, at 2.00pm in Milan at the Palazzo delle Stelline. Present will be Roberto Colaninno, Chairman and Chief Executive of Telecom Italia, Marco De Benedetti, Chief Executive of Tim and Lorenzo Pellicioli, Chief Executive of Seat Pagine Gialle. A similar presentation is planned for Monday 20 March in London, the first stage in Seat Pagine Gialle´s international roadshow which will take in the principal international financial centres.
THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES. SEAT-PAGINE GIALLE S.P.A. WILL BE FILING A REGISTRATION STATEMENT ON FORM F-4 AND OTHER RELEVANT DOCUMENTS CONCERNING THESE TRANSACTIONS WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE "SEC"). WE URGE INVESTORS TO READ THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC BECAUSE THEY CONTAIN IMPORTANT INFORMATION. YOU MAY READ AND COPY ANY DOCUMENTS FILED BY SEAT-PAGINE GIALLE AT THE SEC´S PUBLIC REFERENCE ROOM AT 450 FIFTH STREET, N.W., WASHINGTON, D.C. 20549. PLEASE CALL THE SEC AT 1-800-SEC-0330 FOR FURTHER INFORMATION ON THE PUBLIC REFERENCE ROOM. THESE FILINGS MAY ALSO BE OBTAINED FREE OF CHARGE FROM SEAT-PAGINE GIALLE, VIA AURELIO SAFFI 18, 10138 TURIN, ITALY, TELEPHONE +39-011-4351.
Milan, 15 March 2000