PC IM spiking... PIRELLI: According to usually well informed sources, the private equity arm of Goldman Sachs and Pirelli’s chairman and chief executive Marco Tronchetti Provera are looking to unpick Pirelli’s complex ownership structure with a viewing to taking the €6bn company private. (FT)
FT : Burning rubber, Pirelli edition
Things are rarely straight-forward in corporate Italy, and what follows is no exception.
According to usually well informed sources, the private equity arm of Goldman Sachs and Pirelli’s chairman and chief executive Marco Tronchetti Provera are looking to unpick Pirelli’s complex ownership structure with a viewing to taking the €6bn company private.
Here’s the rather complicated back story.
Pirelli, the world’s fifth largest tyre maker by sales and also a publisher of sought-after calendars, is controlled by Tronchetti through an investment company called Camfin, which owns a 26 per cent stake in the tyre maker.
Camfin is also controlled and chaired by Tronchetti, one of Italy’s most influential businessmen, but has several other shareholders including Italian private equity fund Clessidra and two domestic banks.
Still with us? Good.
Now, Tronchetti has to find a buyer for the stake by 2017 or hand control of the Pirelli board to Clessidra and allow the private equity house to find a buyer for the 26 per cent stake.
This is because of an agreement struck last summer whereby Clessidra and the banks – Intesa Sanpaolo and Unicredit – backed a new Tronchetti holding company called Lauro 61.
Lauro bid for heavily indebted Camfin and swiftly took the investment company private, buying out some revolting shareholders on the way.
In return, the banks and Clessidra, run by Claudio Sposito, the former head of investment banking for Morgan Stanley in Italy, were offered a guaranteed exit in 2017 at a price that would earn them a profit.
Fast-forward to the New Year and local rag La Repubblica runs a story saying Goldman Sachs’ private equity arm could be interested in buying the investment company and the controlling stake in Pirelli. But the paper said the outlines of the deal were not clear, although discussions were continuing.
A day or two later, in a long interview with a German paper to mark his 66th birthday, Tronchetti talked of his intention to step down as chief executive and sell his stake in the company. The businessman said his three children are following their own paths and it was difficult to follow in the footsteps of a business entrepreneur. (Tronchetti took control of Pirelli in 1992 and rescued the tyre maker from the abyss).
Now, we can try and bring things here bang up to date.
Usually reliable sources tell us the discussions did continue and that Goldman with Tronchetti made an indicative offer for the whole company – Pirelli that is.
It was pitched at a significant premium to the current share price of around EURO 12 a share and was backed by Russian oil group Rosneft, which recently struck an agreement to sell Pirelli tyres across its network of petrol stations. Funding was also in place, with a leading bank saying it could provide ¢5bn in financing for deal.
However the approach, conditional on due diligence, was apparently knocked back by the board, who felt they could not recommend the terms.
Well, not at this stage anyway.
Sources say talks could resume in the coming weeks as Tronchetti attempts one final deal.