Telefonica In Talks With Pirelli On Olimpia Stake Buy

MADRID -(Dow Jones)- Spanish firm Telefonica has confirmed it was in talks with Pirelli to buy part of its controlling stake in Telecom Italia.

Telefonica, in a filing to the Spanish stock market regulator, said it had been offered the opportunity to buy a minority stake in Olimpia, the holding company through which Pirelli and other shareholders control Telecom Italia.

Telefonica, the largest telecommunications company in Spain and Latin America by market share, said the talks were at a preliminary stage, and it hadn't reached an agreement with Pirelli about the possible investment.

Telefonica also reiterated previously stated investment commitments. In May last year the company said it wouldn't spend more than EUR1.5 billion on acquisitions until 2008.

Pirelli repeatedly has said it wanted to reduce its 80% stake in Olimpia, the holding company through which it and other shareholders control Telecom Italia.

The remaining 20% in Olimpia is held by Italy's Benetton family. Olimpia owns 18% of Telecom Italia.

On Sunday Pirelli said it was in talks with "financial and industrial" investors, including Telefonica, to sell part of its stake in Olimpia.

France Telecom is one of the other "financial and industrial" investors in talks with Pirelli about acquiring a stake in Olimpia, a person familiar with the situation has told Dow Jones Newswires.

Company Web site: http://www.telefonica.es

-By Christopher Bjork, Dow Jones Newswires; +34 91 395 81 23; christopher.bjork@dowjones.com

(END) Dow Jones Newswires "

Posted to the site on 12th February 2007