Pirelli to over­take AIB with largest Euro­pean IPO this year

The Irish Times - Business - - MARKETS -

Tyre maker Pirelli is seek­ing an eq­uity val­u­a­tion of as much as €9 bil­lion in its ini­tial pub­lic of­fer­ing (IPO), im­ply­ing a trad­ing mul­ti­ple in line with Fin­nish peer Nokian Renkaat Oyj, peo­ple fa­mil­iar with the mat­ter said.

The Ital­ian com­pany will present de­tails of its IPO, in­clud­ing a price range, as early as this week and plans to be­gin trad­ing in Mi­lan in the first week of Oc­to­ber, said the peo­ple, who asked not to be iden­ti­fied as the de­tails are pri­vate. The com­pany has re­ceived strong de­mand from in­vestors and is in talks with larger funds in­ter­ested in be­com­ing an­chor in­vestors for the deal, they said.

If it achieves a sim­i­lar value to Nokian, Pirelli could be­come the largest IPO in Europe this year, po­ten­tially sur­pass­ing the €3 bil­lion sale of Al­lied Ir­ish Banks shares in May. Pirelli has said it’s plan­ning to sell a 40 per cent stake in the list­ing next month.

Nokian trades at an en­ter­prise value, which in­cludes debt, of about 11.3-times ex­pected 2017 earn­ings be­fore in­ter­est, tax, de­pre­ci­a­tion and amor­ti­sa­tion (ebitda), ac­cord­ing to data com­piled by Bloomberg. Pirelli re­ported first-half ad­justed ebitda of €546.4 mil­lion.

As part of a Chi­nese-led takeover in 2015, Pirelli com­bined its in­dus­trial truck busi­ness with ChemChina’s tyre unit to fo­cus on high-end tyres for con­sumer ve­hi­cles and to boost profit mar­gins. Pirelli may also en­cour­age in­vestors to value the firm at com­pa­ra­ble lev­els to other lux­ury Ital­ian com­pa­nies, such as hand­bag maker Sal­va­tore Fer­rag­amo and ap­parel firm Mon­cler, one of the peo­ple said. A rep­re­sen­ta­tive for Pirelli de­clined to com­ment.

A group led by China Na­tional Chem­i­cal bought Pirelli for about €7.4 bil­lion in 2015, delist­ing the firm af­ter nine decades on the stock ex­change. The Chi­nese com­pany and its part­ners plan to re­duce their hold­ing from 65 per cent to be­low 50 per cent in the IPO.

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