Pirelli considers repurchase of Pirelli Tyre shares

Milan, Italy -- Pirelli Chairman Marco Tronchetti Provera will evaluate the possible repurchase of a 38.9-percent share of Pirelli Tyre SpA,

Pirelli & C SpA´s board of directors has instructed Provera to look into repurchasing the shares, which Pirelli sold to a consortium of European banks 16 months ago.

Pirelli has $48600 million (€33295 million) at its disposal following the recent sale of its 80-percent ownership stake in Olimpia SpA, a holding company whose primary asset is Italy´s Telecom Italia. The board issued its instructions during a meeting 9 Nov to approve the firm´s fiscal 2007 third quarter financial results.

Pirelli sold the 38.9-percent stake in Pirelli Tyre in August 2006 to a consortium of six international banks in a transaction that generated $950 million in fresh capital.

The board did not state its reasons for its directive regarding Pirelli Tyre. The shares are held by a company known as Speed SpA, an entity in which the six banks are the shareholders. Pirelli has the right to repurchase the shares that were sold in the event, after four years and six months, the shares have not been placed in an initial public offering, according to Pirelli´s annual report.

At the time, Pirelli said it was selling the stake to help raise shareholder value for the tyre division, which accounts for about 60 percent of Pirelli & C´s revenue.

From Rubber & Plastics News (A Crain publication)