The Pirelli group has agreed to dispose of 38.9% of the capital of Pirelli Tyre for EUR740m, the company said on Friday (29 July).
The deal equates to an equity value for the whole company of approximately EUR1.9bn.
The buyer of the minority stake is an Italian company created by Banca Intesa, Capitalia, One Equity Partners – JP Morgan Group, Lehman Brothers and Mediobanca, with a stake of approximately 19% each, and Banca Leonardo Group with approximately 4%.
The agreement allows the buyer company to launch and conduct, within a period of four years and six months from the date of closing, an initial public offering of the shares acquired.
Pirelli has the option to re-acquire the shares being sold if, after the four years and six month period, those shares have not been the object of an IPO. The re-acquisition price, to be calculated at the moment of the option’s eventual implementation, will be the higher between the market value of Pirelli Tyre at that moment and the price originally paid by the buyers plus an agreed yield.
According to the deal, the buyer company can designate five board members out of the 13 on Pirelli Tyre’s board of directors and nominate a representative among the statutory auditors.
The pacts, given that control of Pirelli Tyre will remain in the hands of Pirelli, also call for qualified majorities for the approval by the board and shareholder meetings of certain extraordinary matters.
After a lock-up period of six months, and with the agreement of Pirelli, the buyer company or its shareholders will have the option of selling up to 49% of the shares originally acquired to qualified subjects (primary financial institutions or investment funds).
The financial institutions will receive a commission equal to 3% of the value of the operation, as well as 1% annually until the IPO.
The closing of the operation is expected to take place next week.
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