Piaggio last week agreed to sell 100 per cent of the maker of the world-famous Vespa scooter to TPG for around 1.2 trillion lire ($659.3 million or 627 million euros), with details of the accord expected to be settled by mid-autumn. However, the head of GE Capital's Italian operations said Friday that his firm had also been in talks with Piaggio's major shareholders and chief executive Alessandro Barberis, and vowed to try to dissuade them from following through on the TPG deal.

``We think there's still room to get in,'' said Luca Giacometti in an interview Friday. ``We thought we would have more time before the final decision, but we got burned.''

The owners of Piaggio include members of the Agnelli family, which decided to sell the groupfollowing the 1997 death of Piaggio Chairman Giovanni Agnelli, the nephew of Fiat SpA's main shareholder Gianni Agnelli, and the passing this April of Giovanni Agnelli's mother, Antonella Bechi Piaggio, whose 40% stake is now scattered among a number of descendants. With no family members interested in taking the helm of the one billion euro concern, the owners decided earlier in 1999 to sell Piaggio, after a deep restructuring brought the Tuscan company back into the black after several years of losses.

People familiar with the situation say that word that Piaggio's owners were interested in selling prompted a number of offers by buyers attracted by the untapped potential of a company with a 32% share of the European scooter market and a world-famous brand name. In recent days, the owners and Barberis settled on TPG, which engineered the successful turnaround of Italian motorcycle maker Ducati SpA and brought the Bologna-based company public earlier this year. PG is expected to use its financial muscle tofollow through on Piaggio's nascent international expansion plans, including a move into the U.S. and a stock-market listing.

GE Capital is hoping to sway Piaggio's owners not through a higher price, but by offering what Mr. Giacometti says is a better industrial deal. He claims that GE Capital can offer Piaggio better growth opportunities through synergies with its U.S. parent, General Electric Co. For example, Piaggio could benefit from GE's research in industrial materials to produce better scooters, while the U.S. group's extensive distribution network could provide a powerful outlet for Piaggio products world-wide. Finally, GE Capital is offering to buy just 30% of the company, allowing shareholders to profit from future growth.

``There are some longtime shareholders who don't want to sell,'' says Giacometti. "These are rich people. They hardly need the money.''

A Piaggio spokesman declined to comment on GE Capital's offer. Meanwhile, Abel Helpern, head of TPG's European operations, responded thatthe group is ``in very serious discussions with Piaggio,'' but declined to comment further.

People familiar with the situation say that both Mr. Barberis, who orchestrated Piaggio's return to profitability and is expected to be retained by TPG, and Piaggio's major shareholders regard the preliminary agreement with TPG as done deal.

Whatever the outcome, GE Capital's move to publicly challenge TPG's agreement is unusual in Italy and is indicative of a new financial and industrial dynamism that was demonstrated this spring in the takeover battle for Telecom Italia SpA.

The Wall Street Journal