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The Italian industrial giant Pirelli is about to demerge its property arm, a move that would make it into a rebranded firm and increase its free float
In May, Marco Tronchetti Provera, chairman of Italian tyre manufacturer Pirelli & C, officially confirmed press rumours of a spin-off of Pirelli RE1 the group's real estate arm. To carry out the demerger, expected to be completed by the end of 2010, Pirelli will distribute nearly all its 58% stake in Pirelli RE among its shareholders.
The operation will result in a voluntary reduction ofthe corporate capital of Pirelli & C for an amount equal to the value ofthe Pirelli RE shares being assigned. Among Pirelli & Cs shareholders, energy and investment group Camfin will hold close to a 15% majority stake in the new venture. Generali, Mediobanca and Unicredito also expressed interest in entering the syndicate, which would jointly hold less than 30% of Pirelli RE's capital.
However, Allianz, Premafin and Lucchini, which hold stakes in the parent company, will not take any shares in the new company, which will be called Prelios.
Pirelli RE chief executive Giulio Malfatto says that following the demerger, Pirelli RE's free float would increase from 42% to nearly 70%, "transforming Pirelli into a public company and guaranteeing greater strategic flexibility". Pirelli RE's lenders unanimously approved the demerger.
Simonetta Chinotti, equity analyst at Mediobanca Securities, says: "The agreement is a strong sign that the group's lending banks are now confident that Pirelli RE will not have problems operating on a stand-alone basis," And she adds that the new shareholding structure after the spin-off makes Pirelli RE more appealing to possible takeover bidders or to potential industrial partners.
However, a number of commentators expressed concerns. Alberto Villa, analyst at Intermonte Bank, welcomes the increased visibility ofthe timing ofthe...