Pirelli sells 38% stake in rival

ONE OF the longest-running and most acrimonious takeover battles in European corporate history ended yesterday as Pirelli, the Italian tyre group, sold its 38.25 per cent stake in Continental, its German rival, writes Heather Connon.

The 2.93 million shares were sold at DM250 ( pounds 103) a share, DM42.5 above yesterday's opening price. Continental's shares closed down DM3.5 at DM204.

The sale was welcomed by Hubertus von Grunberg, chairman of Continental's executive board, who said it marked 'an important new beginning in the company's more than 120-year history. Much of our management capacity has been tied up for two and a half years now.'

The takeover saga began in October 1990, when Pirelli said it wanted to pursue merger talks with the German group. It also established a network of option agreements, mainly with Italian banks, which gave it its 38.25 per cent stake.

The battle culminated in a 10- hour annual meeting at which Pirelli forced the lifting of a restriction which prevented Continental's shareholders voting more than 5 per cent of their shares. The decision was contested in the German courts.

Two months later Dr von Grunberg's predecessor, Horst Urban - an implacable opponent of co-operation - was ousted. The two groups then started negotiations but failed to reach agreement.

Deutsche Bank, which arranged the sale, retained 5 per cent of the shares, increasing its stake to 10 per cent. A further 5 per cent went to Mediobanca and 15 per cent to the government of Lower Saxony. The rest were placed with institutions.