THE lack of counter-measures by Telecom Italia to fend off Olivetti's #52.5 billion euro takeover bid was due to the absence of clarity in the legal framework and was a sound strategy in order to avoid proposing illegal solutions, analysts said yesterday. At the same time, they said the decision Thursday by Telecom Italia's board to authorise its chief executive, Mr Franco Bernabe, to complete a study on integrating Telecom Italia and its 60 per centowned cellular subsidiary, TIM, was generally seen as positive because a merger could create value.

It may be opposed by antitrust authorities, they said. In a bid re-submitted after initially being shot down by the market regulator, Olivetti is offering #10 for each Telecom Italia share - #6 in cash, #2.6 in five-year bonds and #1.4 in equity in Olivetti's Tecnot unit.

Yesterday, Telecom Italia shares fell 2.14 per cent to #9.59 and TIM dropped by 1.61 per cent to #6.12. Olivetti shares gained 2.19 per cent to #2.80. Telecom Italia described the Olivetti offer as being "full of holes", and the market regulator, Consob, is expected to comment on the offer rapidly.

If the offer is valid, Telecom Italia's board can no longer carry out counter measures. However, such steps can be taken by shareholders.

"I am not disappointed that the board did not propose immediate measures," said Uniprof SIM analyst Mr Angelo Imarisio. "Telecom cannot propose anything because it does not know whether there is a valid offer or not."

However, he thought the offer would be declared valid. Olivetti "has fixed a price and has the means to achieve its bid", he said.

Concerning reports that Olivetti had to obtain permission from the Italian authorities to sell its indirect stake in Omnitel Pronto Italia to Mannesmann, Mr Imarisio said: "Olivetti is saying that it does not need government authorisation because Mannesmann is a founding shareholder" of the mobile phone operator.

Olivetti has agreed to sell its 50.1 per cent in Oliman to Mannesmann for 14.803 trillion lire (#7.7 billion). Oliman controls Omnitel and the fixed-line operator Infostrada. "Until now Olivetti has sold its stakes in Oliman to Mannesmann without problem," he said.