Pirelli share price spikes, eases back on acquisition rumour

The trading price of shares in Pirelli & C. SpA jumped to €12.96 late on 29 January after financial website FT Alphaville published information from “usually well-informed sources” about manoeuvres to change the company’s ownership structure. The release of a statement from Pirelli chairman and CEO Marco Tronchetti Provera denying any deal ensured the descent from this peak, however, and by 11:00am GMT today the share price had declined 7.3 per cent from this high to €12.01.

Despite the caveat printed by FT Alphaville that the information it published had “not been formally tested through traditional journalistic channels” and therefore may be “complete rubbish”, the suggestion of Goldman Sachs acquiring Pirelli was too tempting for some shareholders. FT Alphaville wrote on the afternoon of 29 January of an alleged deal involving Goldman Sachs and Tronchetti Provera. “It was pitched at a significant premium to the current share price of around €12 a share (which itself is an attractive price considering that Pirelli shares spent the first nine months of 2013 below €10) and was backed by Russian oil group Rosneft, which recently struck an agreement to sell Pirelli tyres across its network of petrol stations. Funding was also in place, with a leading bank saying it could provide ¢5 billion in financing for deal.

“However the approach, conditional on due diligence, was apparently knocked back by the board, who felt they could not recommend the terms,” the website added. “Well, not at this stage anyway…Sources say talks could resume in the coming weeks as Tronchetti attempts one final deal.”

As reported yesterday, Marco Tronchetti Provera emphatically denies this speculation. “No proposal arrived to the undersigned and I did not make any proposal to the Pirelli board,” he said in a statement released on 29 January. “It’s pure fantasy. Whoever circulated it is responsible to the market and the authorities.”