* Core investors can end shareholder pact from June 15
* Generali wants to withdraw from pact at first opportunity
* Activist investor Amber Capital expects others to join
* Goals include cutting debt pile, reducing exposure to
By Pamela Barbaglia
LONDON, June 13 For decades many of Italy's top
companies have been in the grip of shareholder pacts, often
stifling reform, but its largest telecoms operator, Telecom
Italia, could soon break free, letting in activist investors who
sense an opportunity for profitable change.
The trigger could be as soon as June 15, when financial
groups Mediobanca, Assicurazioni Generali
and Intesa Sanpaolo could end a 2007 shareholder pact
in Telco, the holding company that controls Telecom Italia
The tight control of Telco's core shareholders, led by
Spanish telecom Telefonica, has discouraged most other
investors from buying in.
Marco Fossati, whose investment vehicle Findim owns 5
percent of the telecom, tried but failed in October to change
Telecom Italia's board, which he said acted in the interests of
the core shareholders, not the rest.
But the recent appointment of an all-independent board and
the likely dismantling of Telco make further change possible.
Generali, which owns 19.3 percent of Telco, said on
Wednesday it would exercise its right to withdraw from the pact
at the first available opportunity next week.
One activist investor, U.S. fund Amber Capital, already has
its foot in the door, with a small stake of under 1 percent, but
one of its fund managers, Giorgio Martorelli, said he expects
more to join it when the pact is dismantled.
And there is a packed agenda for those that do.
"What activists can do for Telecom Italia is to support
initiatives to cut the company's debt pile, reduce its exposure
to Brazil and align management's incentives with shareholders'
value creation," Martorelli said.
Telecom Italia needs to attract new investors to help tackle
its hefty 27.5 billion euros ($37 billion) of debt.
Amber also wants to convert Telecom Italia's savings shares
into ordinary stock to increase liquidity and simplify the
ACTIVISTS SET SIGHTS ON EUROPE
Activist shareholders - mainly hedge funds, asset managers
and wealthy entrepreneurs - tend to target underperforming or
poorly managed companies and put pressure on the board to
simplify corporate policy, cut costs and sell underperforming
units to enhance the value of their investment.
They have been mostly a U.S. phenomenon, but that is
"U.S. activists are switching their attention to Europe,"
Knight Vinke Chief Executive Eric Knight told Reuters.
Italy has seen little activity so far, but the demise of
shareholder pacts like Telco's is creating opportunities.
RCS MediaGroup, which owns newspaper Corriere
della Sera, wound up a shareholder pact blocking 60 percent of
the company in October, and disputes among long-term investors
Diego Della Valle and John Elkann could make the company
vulnerable to activists, Martorelli said.
Gruppo Save, the operator of Venice's Marco Polo
airport, has also recently reorganised its shareholder pact,
encouraging activists like Amber to seek even greater change.
Amber has also been pushing changes in Italy's biggest
builder Salini Impregilo and dairy group Parmalat
Telecom Italia chairman Giuseppe Recchi gives them a
"There is room for activists in Italy as long as they have
constructive proposals," he told Reuters, adding that they
needed to take a long-term view, rather than merely seek quick
($1 = 0.7345 Euros)
(Editing by Will Waterman)