CORPORATE NEWS:
Pirelli to sell worldwide cables business
Cables made by Pirelli are likely to
remain Pirelli in brand name only – and even then only for a two year period – pending the closure of a deal by Pirelli to sell its worldwide energy and telecom cables and systems businesses to a private equity investor for Euros 1.3 billion (US$1.6 billion).
Together the two divisions employ some 12,000 people in 52 plants around the world and achieved sales in 2004 worth Euros 3.2 billion (US$3.9 billion).
Energy is the largest division and its production comprises electric cables from very high to low voltage, for underground, submarine and aerial applications as
well as a vast range of accessories. The Telecom division is active in the optical telecommunications market.
The private equity investor in question – Goldman Sachs Capital Partners – is not
a stranger to the cable business, having bought Deutsche Kabel and Cablecom of Switzerland in transactions earlier in the new millennium. Pirelli’s statement says: “Goldman Sachs Capital Partners is fully supportive of the existing management team, which has achieved excellent
results in the past. The new owner intends to work with the existing management
team to continue to grow and develop
the business.”
The key phrase in that otherwise reassuring statement is “in the past”. The cable divisions have not been immune from
the wider industry’s general malaise in recent years. Clearly the new owners hope that a better corporate focus will reinvigorate Pirelli Cables’ fortunes.
For the Italy parent company bidding its cable divisions ‘arrivederci’ will improve its net financial position by around Euros 1.2 billion and allow it to focus on “the development of higher value-added business: telecommunications, tyres, real estate, and activities in the field of broadband and second generation photonics managed by Pirelli BroadBand Solutions and based upon Pirelli Labs’ innovations”.
The transaction is subject to final approval from regulatory and government bodies in various countries.
Company: |
Pirelli & C Spa |
Country: |
Italy |
Fax: |
+39 02 85 35 4451 |
Email: |
|
Website: |
www.pirelli.com |