The Hinduja group, which is in the race to acquire a controlling stake in India's Hutchison Essar mobile phone company, says it will bid for Italian tyre and real estate major Pirelli's stake in Telecom Italia only if the acquisition gives it management control in Italy's largest telecommunications operator.
Confirming this, sources said, "The group does not run any company without absolute control."
Though Pirelli holds the largest block of shares in Telecom Italia, acquisition of that stake alone will not give the Hindujas majority control. However, given the widely-held structure of Telecom Italia's shareholding, it may give them management control.
Pirelli owns 80 per cent of Telecom Italia's holding company Olimpia, which has an 18 per cent stake in Telecom Italia, Europe's fifth largest telecommunications group with sales of nearly $30 billion and market capitalisation of $77 billion.
Back-of-the-envelope calculations put the acquisition cost for Pirelli's stake in Olimpia at $12 billion. However, analyts said Pirelli might ask for a huge premium as the book value of Telecom Italia shares is far higher than its market price.
The race for Telecom Italia is hotting up with Sistema, the Russian billionaire industrialist Vladimir Yevtushenkov being the third to join the fray.
US private equity firm Blackstone also expressed an interest in picking up a stake in Telecom Italia two months ago. Analysts said several others were expected to join the bidding bandwagon soon
