Pirelli sells 39 percent of Tyre unit to banks
Milan, Italy - Following the failed IPO launch of Pirelli Tyre last month, Pirelli SpA has agreed with a consortium of banks to sell a 39 percent stake in Pirelli Tyre for Euro 740 million. This values the company at around Euro 1897 milion. This valuation is at the low end of Pirelli's initial guide price of Euro 7.40 to Euro 9.00 per share announced prior to the IPO.
The company said it is still working out the detailed arrangements for organisational structures and other aspects. The consortium includes Banca Intesa, Banca Leonardo Group, Capitalia, One Equity Partners - JP Morgan, Lehman Brothers and Mediobanca.
Pirelli pullled the IPO at the end of June when institutional investors were not prepared to meet Pirelli's expected price range for the shares it was offering to sell. The IPO took place as Sunitomo and Bridgestone both issued severe profit warnings based on rapid rises in raw material costs.
Separate from the IPO issues, Pirelli said that the cost of raw materials for its truck tyre business have risen by about 13 euros per unit between January 2006 and the end of July.
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Financial statement from Pirelli (scroll down to bottom of page)
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