Italian conglomerate Pirelli SpA, which manufactures telecommunications cables as well as tyres, is to acquire 87% of Italian telecommunications engineering group Sirti SpA for $788m in cash. The move is intended to combine Pirelli’s cable and wire business, which made up 52% of the $5,320 sales the company has generated this year so far, with Milan-based Sirti’s telecommunications and cable-television systems and integration expertise, and to give Pirelli control of a company that it hopes will flourish in a telecoms de-regulated Europe. Pirelli, which currently holds 3% of Sirti, has been rumored as a potential take-over candidate since Telecom Italia announced its intentions to sell all but 10% of its 49% controlling interest in Sirti. Pirelli will make a public offer for the remaining 38% stake, for a price of $5.95 per share, the same price that is being offered to Telecom Italia. The deal is going to be funded by a $506m convertible bond offering, issued in January. This year Sirti was awarded a $1.27bn contract for building the second stage of the Socrates project, to install cable to Italian households. Pirelli claims Sirti is on course to achieve revenues of around $1.2bn in 1997 and says it will be profitable.
