PIRELLI: PRIVATE PLACEMENT OF 38.9% OF PIRELLI TYRE FOR 740 MILLION EUROS SIGNED THE STAKE WILL BE BOUGHT BY A COMPANY CONSTITUTED BY PRIMARY ITALIAN AND INTERNATIONAL FINANCIAL INSTITUTIONS THE AIM OF THE OPERATION IS A SUBSEQUENT IPO
Milan, 29 July 2006 – The Pirelli Group has reached an agreement with a number of primary Italian and international financial institutions (Banca Intesa, Banca Leonardo Group, Capitalia, One Equity Partners – JP Morgan Group, Lehman Brothers and Mediobanca) for the disposal of 38.9% of the capital of Pirelli Tyre SpA for a consideration of 740 million euros, which equates to an equity value for the whole company of approximately 1.9 billion euros. The buyer of the minority stake in Pirelli Tyre SpA will be an Italian company constituted by Banca Intesa, Capitalia, One Equity Partners – JP Morgan Group, Lehman Brothers and Mediobanca, with a stake of approximately 19% each, and Banca Leonardo Group with approximately 4%. The agreement allows the buyer company to launch and conduct, within a period of four years and six months from the date of closing, an Initial Public Offering of the shares acquired. Pirelli has the option to re-acquire the shares being sold if, after the four years and six month period, those shares have not been the object of an IPO. The re-acquisition price, to be calculated at the moment of the option’s eventual implementation, will be the higher between the market value of Pirelli Tyre at that moment and the price originally paid by the buyers plus an agreed yield. The relationship between seller and buyers is regulated by pacts. In the context of these agreements, it is foreseen that the buyer company can designate five board members out of the 13 on Pirelli Tyre’s Board of Directors and nominate a representative among the Statutory Auditors. The pacts, given that control of Pirelli Tyre will remain in the hands of Pirelli & C. SpA, also call for qualified majorities for the approval by the Board and Shareholder meetings of certain extraordinary matters. After a lock-up period of six months, and with the agreement of Pirelli, the buyer company or its shareholders will have the option of selling up to 49% of the shares originally acquired to qualified subjects (primary financial institutions or investment funds). The financial institutions will receive a commission equal to 3% of the value of the operation, as well as 1% annually until the IPO. Pirelli was assisted in the operation by the Chiomenti legal studio and the buyer financial institutions by Gianni, Origoni, Grippo & Partners legal studio. The closing of the operation is expected to take place next week.