AMSTERDAM, Netherlands—Pirelli S.p.A. intends to buy out all outstanding shares and warrants in Pirelli Tyre Holding N.V., an $89 million (U.S.) move being taken to ``simplify group structures and concentrate the share value of its two core businesses, tires and cables,'' the company said. The action will end Pirelli's seven-year attempt to establish the tire activities as a separate entity, although Pirelli Tyre Holding N.V. will continue as a ``subholding company'' within Pirelli S.p.A., overseeing the firm's tire operations worldwide.
Pirelli set up Pirelli Tyre Holding in 1989 with the goal of attracting more outside investors, a strategy never achieved. Pirelli S.p.A. currently owns 93.6 percent of PTH shares; the highest share of outside investors in PTH was 23.6 percent in 1989.
Pirelli is expected to offer 19.50 guilders ($11 U.S.) per share to outside investors holding PTH shares; this is a slight premium over the prevailing trading price of 18.80 guilders on Jan. 15. Pirelli expects to issue final conditions by mid-February.
The buy-out is in stark contrast with the firm's efforts the past few years to shore up PTH and make it attractive to outside investors. In 1994, Pirelli issued 31 million new shares at 17.10 guilders per share, preceded a year earlier by an offering of 46.5 million shares, at 10 guilders per share.
These issuings were largely ignored by outside investors, forcing Pirelli to underwrite them almost entirely, for an investment of roughly $550 million. As a result, Pirelli S.p.A.'s ownership of PTH increased to 88 percent at year-end 1995 from 69 percent at the end of 1992.