The board of directors of Pirelli & C. SpA opted to drop the company's initial public offering of shares in Pirelli Tyre SpA on June 30, only six days before the firm was scheduled to debut on the Milan stock exchange.
Pirelli & C. was planning to sell a 35 percent stake in the tire company via the sale of 90 million shares representing an expected market value of Euro 1.9 billion to Euro 2.3 billion.
Pirelli officials said the present condition of financial markets and the stock market performances of the world's leading tire companies would not allow a sale price “which faithfully and adequately reflects the company's intrinsic value.”
“Pirelli & C. decided not to proceed with the IPO operation which, under present conditions, would not have adequately valued a company recognized as one of the world's key operators in terms of profitability, positioning and capacity for innovation,” said a prepared statement.
The decision to abort the IPO was made in the final stages of marketing to investors by a consortium of investment banks, according to a report by The Financial Times that did not cite sources.
The banks, including Goldman Sachs, Mediobanca, Merrill Lynch, JPMorgan, Morgan Stanley and Capitalia, were scheduled to set the official offer price July 1. They had already been forced to cut the price range for the IPO by about 10 percent to between Euro 7.40 and Euro 9 after lackluster demand from investors.
Pirelli gave no new timetable for a sale.
Copyright 2006 Powersports Business