Rubber meets road for Pirelli's market comeback

Italian tyremaker Pirelli on Friday set a share price for its stock market return in Europe's biggest IPO this year, valuing the company at a total 6.5 billion euros ($7.7 billion).

The shares will be offered at 6.50 euros each on the Milan stock exchange in the initial public offering next week, Pirelli said in a statement.

Some 35 percent of Pirelli's capital will go on sale to investors, but that stake could rise if an option for additional shares known as "green shoe" is exercised.

The operation marks a bourse comeback for Pirelli, an icon of Italian industry famous for providing Formula One racing tyres, after it withdrew from the stock exchange two years ago after it was taken over by China National Chemical Corp (ChemChina).

According to a deal with the Chinese giant, Pirelli was to return to the stock market by 2019 at the latest after a split between the company's consumer and industrial activities.

The Milan listing concerns only the consumer side, "a 145-year-old start-up," as chief executive Marco Tronchetti Provera has described the reshaped business.

The industrial tyre business is being integrated into Aeolus Tyre, which has a Shanghai listing.

Tronchetti Provera previously said the integration of Pirelli's industrial tyre business into Aeolus had gone much more quickly than expected and that the early listing had also been driven by "extraordinary growth" on the consumer tyre side of the business.

The company, which had sales of 4.97 billion euros in 2016, is pitching its shares on the back of a forecast of growth of at least nine percent a year through 2020, at which point the 70-year-old CEO expects to step down.

The IPO will reduce ChemChina's stake, held through the Marco Polo holding company, to below 50 percent.

Tronchetti Provera backed the 2015 deal with ChemChina as the best way to prevent Pirelli becoming a target for hostile takeover attempts.

cco/jh/spm

PIRELLI & C. SPA

INDUSTRIAL HOLDING

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