M&A

10 November, 2009

UPDATE 1-Goldman cuts Prysmian stake to 16.8 pct

* Goldman sells 14.3 pct stake in placement

* Stake sale larger than expected

* Shares sold at 12 euros - brokers

* Shares down 7 pct

(Adds detail, shares)

MILAN, Nov 10 (Reuters) - Goldman Sachs Group Inc (GS.N) cut its stake in Italian cable maker Prysmian SpA (PRY.MI) in a larger-than-expected placement, leaving it with 16.8 percent, the U.S. bank said on Tuesday.

Goldman Sachs sold 14.3 percent, more than the 12 percent it previously said it planned to sell on Monday. Two Milan brokers said the shares were sold at 12 euros per share, below the 13-euro level reached after Prysmian's third-quarter results last week. [ID:nL5569419]

"This placement doesn't bode particularly well, in our view. Goldman's strong position in Prysmian's capital gives it access to a high level of information about the group," a broker said.

"We see its decision to reduce its stake by more than a third as a sign that it sees no upside in the coming quarters."

At 0940 GMT, Prysmian shares were down around 7 percent at 12 euros.

Another Milan broker called the Goldman move "good news" since it removed an overhang of shares which the U.S. bank had been expected to sell.

The broker said Goldman had offered the shares in an 11.80-12.30 euros range.

A third broker said Prysmian could become a takeover target, though Prysmian's market capitalisation of 2 billion euros ($3 billion) does not make it an easy target.

South Korea's Taihan Electric Wire Co Ltd (001440.KS) has a 9.9 percent stake and there is speculation it will raise its holding via the placement.

Goldman has agreed a 60-day lock-up on further sales of its remaining stake, it said. (Writing by Nigel Tutt; editing by Simon Jessop)

Source: http://www.reuters.com