MILAN, Italy (Nov. 15)—Pirelli S.p.A. plans to sell majority control of its energy and telecom cables businesses in the foreseeable future and refocus its resources on its tire business.
Pirelli didn't specify a timeline for divesting control of the cables businesses. However, in releasing its third quarter results the company did say it will invest more than $475 million during the next three years to expand tire capacity in the U.S., Brazil, China, Germany, Romania and the United Kingdom.
Pirelli is working with its primary international financial institutions to determine fair market value for its cable operations before starting sale negotiations. It said the operations' "international leadership in terms of market shares, technologies, profitability improvements and management quality" have attracted the interest to institutional investors.
The cables businesses represent half of Pirelli's sales but less than a third of operating earnings, according to the company's nine-month financial results. The company said the units are significant players in their markets and high cash-flow generators, and the firm plans to retain minority ownership in them.
For the nine months, Pirelli reported net income of $275 million compared to a loss in 2003 on 7.7-percent higher sales of $6.37 billion.