Pirelli Set to Sell Telecom Italia Stake

Pirelli has been in discussions with AT&T, the American telecoms giant, and America Movil to sell two thirds of its controlling share-holding in Telecom Italia. Media sources have been reporting that Pirelli has been negotiating to sell the stake for months. According to an official statement published 1 April, AT&T and America Movil, of Mexico, are involved in talks to buy a third each of Olimpia, a holding company that controls 18 per cent of Telecom Italia and which is 80 per cent owned by Pirelli, the Italian tyre and property group. The deal could value Pirelli’s stake at about €9.5 billion (£6.5 billion).

The deal would value each Telecom Italia share at €2.82 minus the undisclosed net debt of Olimpia. That is expected to be way below the €4 that Mr Tronchetti Provera originally paid for his holding in 2001 but could be a third above the company’s €2.14 closing price on Friday 30 March. The offer is subject to due diligence and is valid until April 30, Pirelli said.

In November, Pirelli wrote down the value of its Olimpia stake by €2.1 billion, valuing Telecom Italia shares at €3 each, still well above the current Telecom Italia market price.

Pirelli owns 80 per cent of Olimpia, with the Benetton family owning the other 20 per cent. Under the deal, the two groups will share control of the holding company with AT&T, the largest telecoms group in the US, and America Movil, which is controlled by the billionaire Carlos Slim.