MILAN, Italy (July 30, 2001)—Pirelli S.p.A. plans to sell its truck tire and energy cable units in the coming 18 months as part of a restructuring the company will undertake following its bid for control of Italian telecommunications concern Telecom Italia.
Pirelli teamed up recently with an investment firm controlled by the Benetton clothing family to buy 23 percent of Olivetti S.p.A., the Italian telecommunications giant that in turn owns 54 percent of Telecom Italia. The deal is valued at about $6 billion.
Officially, Pirelli said its strategy will be to focus on telecommunications based on cable, optical fibers´ components and telecom services technologies; along side these core businesses Pirelli will operate a small number of high-profit-margin companies at the top end of their markets—comprising essentially the passenger, light truck and motorcycle tire operations.
Pirelli's commercial tire activities encompass seven plants in six countries on three continents, and represent 33 percent of Pirelli's tire division sales, or $875 million in fiscal 2000 revenue, according to company documents. Only one of the plants, though, is dedicated solely to truck tires; the others are mixed product facilities. Pirelli does not sell truck tires in North America. The company did not comment on potential buyers for the business.
Earlier this year, Pirelli sold its remaining 40-percent interest in its former agricultural tire operationsin Tivoli, Italy, to Trelleborg A.B., which operates the business as Trelleborg Wheel Systems Group.
Pirelli and Edizione Holding, the Benetton financial arm, announced their bid on July 28. The Pirelli and Benetton consortium already owned a 3-percent stake in Telecom Italia, so the Olivetti purchase will give them 27 percent control of Telecom Italia.