Pirelli and Company announced today it had bought €34.4 million ($47.2 million) worth of shares in real estate subsidiary Pirelli RE, effectively increasing its stake to 52.3 percent. The purchase totaled 859,741 shares.
According to press reports, Pirelli said it saw the transaction as an opportunity to take advantage of an atmosphere in which stock performance of companies in the sector is lower than analysts’ valuations.
The announcement follows a spate of property acquisitions by the real estate firm.
Last Tuesday, Pirelli RE and Deutsche Bank’s RREEF announced its acquisition of German residential property group BauBeCon from New York private investment firm Cerberus Capital Management for €1.6 billion. The BauBeCon portfolio, comprised of more than 27,000 residential units throughout German cities like Berlin, Hanover and Magdeburg, has an average value of €960 per square meter.
The firm also announced last Friday that it is launching new branches in Romania and Bulgaria in partnership with banker UniCredit Group.
Pirelli’s preliminary review for the first half of 2007, released yesterday, showed a 10.2 percent increase in operating profit. Subsidiary Pirelli RE’s operating profits grew 36 percent, leading some to speculate it was fueling the parent company’s jump in profits.