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Italia deal fleshed out
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July 30, 2001: 9:18 a.m. ET
Pirelli to sell units after it and Benetton take control of Telecom Italia
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LONDON (CNN) - Italian tyre manufacturer Pirelli said it will sell assets to finance a $6.1 billion stake purchase that gives it control of Telecom Italia.
Pirelli Chief Executive Marco Tronchetti Provera also announced he will become the new chairman of Italy's biggest phone operator after his company took a large stake in Telecom Italia owner Olivetti, which acquired the phone operator two years ago in Italy's biggest hostile takeover.
The moves come after Pirelli, along with Itay's Benneton family, took control of the phone company by buying 23 percent of Olivetti, which owns 55 percent of Telecom Italia, for  7 billion.
The Pirelli chief said his company would sell its truck-tyre and energy-cables businesses to concentrate on telecoms and real estate, according to a Reuters report of a conference call Tronchetti Provera held with analysts.
The complicated deal gives the tyre and cable manufacturer, and Benetton, control of the phone giant, and also Italy's largest mobile phone company TIM.
Analyst Chris Lewis of telecommunications consultants The Yankee Group told CNN: "Telecom Italia needed a very strong positioning from the top. It has failed to get that through acquistion or by being acquired.
The coup happened after supporters of Telecom Italia Chief Executive Roberto Calaninno, who helped the head of Olivetti to win the company two years ago, changed sides.
A merger of Olivetti and Telecom Italia may be considered in the future as a way to reduce the companies' combined debt of 40 billion, Tronchetti Provera said.
Pirelli said on Monday it had also raised 2 billion from several banks to help finance the takeover. Its debt will be 3.15 billion following the Olivetti deal.
"We'll do what ever is the best option to create value and reduce the debt of Olivetti and Telecom Italia," Tronchetti Provera said. "I have to be inside the company to be able to know what needs to be done."
He also announced Gilberto Benetton would become Telecom Italia's vice chairman.
Telecom Italia's chief Roberto Colaninno is to resign on Tuesday, Olivetti said in a statement on Sunday.
Pirelli's shares dived nearly 15 percent in afternoon trading in Milan. Olivetti was down nearly 10 percent.
Enrico Bondi, chief executive of Montedison, and Carlo Buora, co-chief executive of Pirelli, will be co-chief executives of Telecom Italia, Tronchetti Provera said.
Pirelli's net debt after the deal will be around 3.15 billion, compared with cash of 2.23 billion at the end of June and 3.32 billion at the end of March, Tronchetti Provera said. 
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