Telecom Italia felled twice by “Chinese” challenge: No majority stake

When Olivetti announced its takeover bid for Telecom Italia in February 1999, it resorted to a time‐honored feature of Italian capitalism to make a credible challenge. “Chinese boxes”, or “capitalism without the capital” is a way of securing control without holding a majority stake in the acquired company or taking much heed of minority shareholders’ interests. It works by effectively creating a chain of holding companies with each company owning a part of the next company in the chain. A person or organization in the chain can therefore exercise an influence on subsequent companies in the chain which is disproportionate to the number of shares owned.