Share price fall deflates Pirelli’s market comeback.
Shares in Italy’s Pirelli fell on Wednesday on the tyremaker’s return to the Milan stock exchange two years after it was taken over by China National Chemical Corp (ChemChina).
The stock fell as much as 3.4 percent during the day, with a trader saying that while the IPO price had been cut it was still considered to be overvaluing the company.
The maker of tyres for Formula One racing teams and premium automakers such as BMW and Mercedes sold shares in the offer at 6.5 euros apiece, valuing the company at 6.5 billion euros ($7.65 billion). That was well below the 8.3 euros per share that marked the top of the original offer price range.
Despite being one of Italy’s best-known corporate names, prospective investors had raised concerns over Pirelli’s debt pile, complex governance structure and the risk that one of the existing minority shareholders could sell once a lock-up expires.
The relisting will test demand for a streamlined firm that focuses on high-end consumer tyres after its less profitable truck and industrial tyre business was folded into part of ChemChina. The shares will join Milan’s blue-chip FTSE MIB index from December, the head of the bourse said.
Chief Executive Marco Tronchetti Provera sought to play down any disappointment over the share price performance on Wednesday.