PIRELLI TO SELL 40PC STAKE
Tyremaker plans to return to Milan stock exchange next month
MILAN
ITALIAN tyremaker Pirelli, bought by state-owned China National Chemical (ChemChina) two years ago, will sell up to 40 per cent of its capital in an initial public offering (IPO) as it plans to return to the Milan stock exchange next month.
The relisting of the world’s fifth-largest tyremaker will test demand for a streamlined company that focuses on high-end consumer tyres, after its less profitable truck and industrial tyre business was folded into a unit of ChemChina.
Prior to a 2015 delisting that had followed ChemChina’s takeover, Pirelli’s shares had traded on the Milan exchange since 1922.
ChemChina acquired the Italian group — one of Italy’s bestknown brands — through Marco Polo International Italy for more than €7 billion (RM36 billion).
After carving out the industrial tyres business, it left Pirelli to focus on more upmarket tyres for brands such as Mercedes, Audi and BMW.
With high-value products expected to account for some 63 per cent of revenue by the end of 2020, Pirelli aims to market itself as a top-end industrial player, sources have said.
“The goal is to get a better valuation of the group because of its focus on higher-margin products,” one source said.
Peers such as Continental AG and Michelin trade at around 10.8 times earnings, according to Thomson Reuters data. Top-end sports carmaker Ferrari , another well-known Italian industrial brand that sought a luxury goods company valuation in its IPO, trades at 35 times its earnings.
State-owned ChemChina holds a 65 per cent stake in Marco Polo, currently Pirelli’s sole shareholder.
Holding company Camfin, whose investors include Pirelli boss Marco Tronchetti Provera and Italian banks Unicredit and Intesa Sanpaolo, has more than 22 per cent of Marco Polo. The rest is in the hands of investment fund LTI, linked to Russia’s Rosneft.
ChemChina and Camfin have committed not to sell any further Pirelli shares for a year after the group’s market debut, while investment fund LTI would hold on to its shares for at least 180 days after the floatation, the statement said.
Following its listing and the approval of its 2018 results, the company said it expected to pay out 40 per cent of its net profit in dividends.
Pirelli reported a net profit of €67.6 million in the first half of the year and expects revenues to grow an average of nine per cent per year between 2016 and 2020.