Olivetti Pc Unit Sales Talks Collapse

Italy’s Olivetti SpA broke off talks to sell its personal computer unit to a group led by American financier Gary Klesch whose investors included Bennett S. LeBow, people familiar with the talks said.

Olivetti, which has been trying to sell the PC unit for two years, put off the Klesch offer after receiving at least one new bid it found more appealing, one of the people said.

Olivetti’s decision to scrap the bid was also sparked by concerns that selling the unit to financial investors would raise red flags with unions and politicians in Italy, that person said.

For Olivetti, the sale of the PC unit is a top priority which Chief Executive Roberto Colaninno pledged last month would be completed by the end of the year.

“It is imperative they sell it,” said Nimrod Schwartzman, an analyst at HSBC James Capel in London. “They are on the line after saying it will be done this year.”

Olivetti has lost 4.3 trillion lire ($2.9 billion) since 1990, largely because of losses in its personal computer division. Last year it hired J.P. Morgan & Co. to find a buyer for the unit, targeting three Korean companies, Samsung Group, Goldstar and Hyundai as possible buyers.