Pirelli & C SpA confirmed media reports Sunday that it was in talks to sell a stake in Olimpia, the holding company that controls Telecom Italia, to Telefonica of Spain.
Pirelli owns 80 percent of holding company Olimpia, which has an 18 percent stake in Telecom Italia, Europe's fifth-largest telecommunications group. The remaining 20% in Olimpia is held by Italian family Benetton. Pirelli would also need the green light for the sale from investment bank Mediobanca and insurer Generali Assicurazioni, with which Pirelli has a "consultation pact" which in effect includes the bank and the insurer among controlling shareholders at Telecom Italia.
US private-equity firm Blackstone, Indian group Hinduja, Russian conglomerate AFK Sistema, Deutsche Telekom and Telefonicawere were reported interested to buy a stake in Olimpia., if the Italian government would allow foreign investors in its dominant telecoms operator.
Daily La Stampa said today in an unsoruced report that Pirelli plans to sell 30 pct of Olimpia to Telefonica and that the study of an alliance between Telecom Italia and Telefonica is at "an advanced stage".
Pirelli reiterated that the stake in Olimpia and indirectly in Telecom Italia is strategic and that it intends to keep the majority of Olimpia "strongly in Italian hands".
The partnership with Telefonica could generate strong synergies in Brazil and Germany. A Telefonica spokesman said he could not comment.
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