Pirelli Chairman Says Sale Proceeds to Go Back Into ‘Core Businesses’
(Akron/Tire Review) After months of wrangling and speculation, Pirelli SpA finally sold off its stake in struggling Telecom Italia SpA, vowing to reinvest part of the proceeds into its “core businesses.” In the deal announced Saturday, Pirelli and Benetton units Sintonia SA and Sintonia SpA are selling holding company Olimpia SpA, which owns an 18% share of Telecom Italia, to a group of investors headed by Spain’s Telefonica SA.
The 4.1 billion euro deal will yield about 3.3 billion euro to Pirelli. After accounting for debt, that will leave an estimated 1 billion euro to Pirelli for reinvestment, according to reports.
Pirelli chairman Marco Tronchetti Provera told European media that the company would invest the proceeds in its “core businesses,” which include tires, real estate, broadband equipment and environmental businesses. It was not clear how much of that will go into Pirelli’s tire operations, though Tronchetti Provera was quoted as saying Pirelli is building a new tire plant near Turin and will “invest tens of millions of euros” there.
There has also been speculation that Pirelli will try to buy back the 39% share of Pirelli Tyre that Pirelli SpA sold off to a group of banks last year.