Pirelli in talks to sell TI stake

Pirelli said it held exclusive talks with AT&T and Mexico’s America Movil late Sunday to sell off two-thirds of its stake in Telecom Italia (TI).

Pirelli controls an 18 pct stake in Telecom Italia through the holding company Olimpia SpA. In the last few months various suitors have been associated with TI, including Spanish incumbent, Telefonica.

As with the failed bid from the Spanish player, TI’s management and board are concerned that the Italian incumbent would cede too much control to foreign investors if a deal with AT$&T and Movil was successful. Pirelli is known to have had discussions on the future of TI with Italian banks – a solution favoured by the Italian government.

Those talks have been hindered by a seemingly insurmountable obstacle: price. TI’s former chairman, Marco Tronchetti Provera who was ousted last September following a row with the Italian government over the future of TI, overpaid for TI stock in 2001 paying Eur3 per share. They are now valued at Eur 2.13.

Pirelli said negotiations were based on proposals that expire April 30 valuing TI at Eur2.82 per, share minus the net debt of Olimpia.

According to reports in Monday’s Financial Times newspaper, people close to the talks said no deal had been reached, frustrating Pirelli which has been attempting to offload its stake in TI for some time. A report in the Italian daily Finanza & Mercati said Sunday that Pirelli was so frustrated that it is “ready to sack” the TI board.