Pirelli to Float Tyres Business, Raise Over *850 Million

Strategic Insights -

Pirelli, the Italian conglomerate behind the iconic Girlie Calendar, is set to meet today to approve the flotation of its tyres business, a move that could raise up to *850 million for the company. The sale, which is being handled by Goldman Sachs, is expected to value the business at up to *3 billion. This move comes as Pirelli seeks to maintain its majority stake in Telecom Italia, a goal that requires significant cash reserves.

In related news, struggling Japanese electronics maker Sanyo and mobile giant Nokia are planning a tie-up in the mobile phone business, with the pair set to announce the deal today. Under the joint venture, the two companies will develop and manufacture mobile phones for the CDMA 3G standard, a move that will help Sanyo cope with the costs of developing new phones and give Nokia access to Sanyo's expertise in designing advanced handsets.

Meanwhile, France Telecom, owner of Orange and Wanadoo, has announced plans to slash its workforce by 17,000 as part of a bid to increase profitability. The job cuts, which will all but 1,000 take place in France, amount to between 8% and 10% of the company's employees. France Telecom also reported a 2.8% rise in profits for 2005, with sales expected to grow by around 7% this year.

In investment news, the new boss of Schroders' Euro Equity Fund, Gary Clarke, has made significant changes to the fund's portfolio, dumping a third of the main investments and switching into new bets. The move, which is estimated to be worth *1.6 billion, is part of Clarke's efforts to turn the fund around after a period of underperformance.

Finally, Whirlpool's acquisition of Maytag, the maker of Hoover vacuum cleaners, is facing another regulatory hurdle, with US competition authorities requiring an extra month to review the deal. The authorities are concerned about the control a combined Whirlpool-Maytag would have in the market for washers and dryers, with the companies having extended a 27 February deadline for the antitrust investigation until 30 March.

Key Takeaways:

  • Pirelli is set to meet today to approve the flotation of its tyres business, which could raise up to *850 million.
  • Goldman Sachs is handling the sale of a 30-40% stake in the business, valuing it at up to *3 billion.
  • Sanyo and Nokia are planning a joint venture to develop and manufacture mobile phones for the CDMA 3G standard.
  • France Telecom is cutting 17,000 jobs, 8-10% of its workforce, as part of a bid to increase profitability.
  • France Telecom reported a 2.8% rise in profits for 2005, with sales expected to grow by around 7% this year.
  • Schroders' Euro Equity Fund has been significantly changed under its new boss, Gary Clarke, with a third of the main investments being dumped and new bets being taken.
  • Whirlpool's acquisition of Maytag is facing another regulatory hurdle, with US competition authorities requiring an extra month to review the deal.

Statistics:

  • The sale of a 30-40% stake in Pirelli's tyres business is expected to raise over *850 million.
  • The business is valued at up to *3 billion.
  • France Telecom plans to cut 17,000 jobs, 8-10% of its workforce.
  • France Telecom reported profits rose 2.8% in 2005 to €18.4 billion.
  • Sales are expected to grow by around 7% this year.
  • Schroders' Euro Equity Fund has been changed with a third of the main investments being dumped and new bets being taken, worth an estimated *1.6 billion.
  • Whirlpool-Maytag's combined market control in washers and dryers is a concern for US competition authorities.

Sources:

  • "Goldman Sachs Mandated to Handle Pirelli Tyres Sale". Bloomberg.
  • "Sanyo and Nokia Planning Mobile Phone Tie-up". Reuters.
  • "France Telecom to Cut 17,000 Jobs". Le Figaro.
  • "France Telecom Reports 2.8% Profit Rise". Les Echos.
  • "New Investment Boss Makes Big Changes at Schroders". Citywire.
  • "Regulators Put Brake on Whirlpool-Maytag Deal". Wall Street Journal.