The European Commission has approved a Â£2 bln ($3.2 bln) joint venture between Morgan Stanley, Pirelli and Telecom Italia/Olivetti.
The decision effectively dismisses opposition from other Italian funds who had argued that a portfolio of that size concentrated in Rome and Milan would create a monopoly in land and be anti-competitive.
The complex deal sees Pirelli SpA and the Telecom Italia/Olivetti group pool Â£2 billion ($3.2 billion) of offices and land. Former parent company Pirelli & C will take a 25% stake through its joint venture with Morgan Stanley Real Estate Funds.
The move forms part of TelecomÂ's strategy of selling off non-core assets to cut its Â£23 billion ($36.8 billion) debt.
But it also enables Pirelli to bolster its real estate portfolio ahead of a possible flotation later this year and allows the company to take advantage of a change in Italian law, reducing the tax burden on closed-end property funds.