Tyre and cables firm Pirelli took charge at Italy's largest company Telecom Italia today after staging a dramatic takeover coup that hit its own shares and those of Telecom parent Olivetti.
As Pirelli began sending its own people in to figure out how to reduce heavy debts at Olivetti, the Benetton retail family prepared to pass half of its share of the euro seven billion to two of Italy's leading banks to lend the group extra financial muscle.
Pirelli announced it would start selling off slow-growing businesses in power industry cables and truck tyres to redefine the industrial giant as a telecoms and technology group, clearly betting on a sharp turnaround in depressed high-tech markets.
"We have made a strategic decision to enter telecoms services, which produce a lot of cash andprovide opportunities to grow internationally," Pirelli chief executive Mr Marco Tronchetti Provera told analysts in a conference call.
There was embarrassment, however, as Pirelli's efforts to explain its telecom deal were foiled by bad phone lines, leaving the chief executive and analysts appealing to each other to speak up.
Currently Pirelli owns 60 per cent and the vehicle for the Benetton retail family's widespread industrial investments, Edizione Holding, owns 40 per cent.
Pirelli would remain with at least 60 percent of the new company, and the Benettons would maintain at least 20 per cent, suggesting they would halve their stake.
Pirelli opened down 13 per cent at euro 2.67as the cost of the operation wiped out its cash pile and pushed it into debt.
Pirelli's debt will stand at euro 3.15 billion after the Olivetti deal, though that should fall to about euro 1 billionafter various asset disposals.