Telefonica-led group buys stake in Telecom Italia

Pirelli & C SpA accepted a $5.58-billion offer to turn over control of Telecom Italia to a consortium of companies including Spain's Telefonica and a group of Italian financial interests, a Pirelli statement, quoted by an Associated Press report, said.

The Associated Press report said that under the deal, Pirelli sells its entire 80% interest in the Olimpia holding company, which has taken over Telecom Italia with an 18% share in 2001.

The Benetton family also sells its 20% share in Olimpia, but it remains part of the controlling shareholder group, the report said.

The transaction is expected to be completed by October, Pirelli said.

The new controlling shareholder group in Europe's fifth-largest telecom operator include Spain's Telefonica, Mediobanca, Banca Intesa Sanpaolo, the insurer Generali Assicurazioni and the Benetton family, the report further said.

Italian news agencies reported that the group would form a new company, Telco Spa, to control Telecom Italia with a 23.6% share, incorporating also the 5.6% Telecom Italia share already held by Mediobanca and Generali, the report said.

The report further said the deal comes after AT&T backed out of talks to buy a controlling stake of Olimpia with its Mexican affiliate America Movil.