Italian tires-to-telecoms conglomerate Pirelli announced on Saturday it has found a buyer for its controlling stake in Telecom Italia, a consortium of Italian financial institutes and Spain’s Telefonica.
The deal is valued at $5.58 billion and is expected to close by October. Pirelli is selling its 80% stake in Olimpia, the Telecom Italia holding company. The new owners will obtain 18% of Telecom Italia but will represent a majority of the board at the telecoms and media giant.
In addition to its core telecoms business, TI owns terrestrial broadcaster La7 and MTV Italia and is investing heavily in the rollout of IPTV, giving the new owners a growing stake in Italy’s terrestrial and digital TV sector, plus the Internet sector.
The sale of Olimpia has been fraught with political controversy from the beginning. The Romano Prodi government kicked up a fuss earlier in the month when it appeared Pirelli would be selling control of Telecom Italia to a group of North Americans led by AT&T and Mexico’s America Movil.
Politicians on both the right and left urged Italian businesses to step into the bidding to keep the massively indebted Telecom Italia in local hands. At one point, the Silvio Berlusconi-controlled Mediaset said it would consider entering the bidding, a move that would have given Italy’s largest commercial broadcaster an important foothold in Italy’s growing Internet market. It was always seen as a longshot, however, as Italian anti-trust rules would have blocked a Mediaset bid.
The new controlling group in TI, Europe’s fifth-largest telecoms operator, is Telefonica, Mediobanca, Banca Intesa Sanpaolo, the insurer Generali Assicurazioni, plus members of the Benetton family.
Italian media said they will form a new company, Telco Spa.