Italian tyre and cable company Pirelli is to sell its optical components business to US fibre optics giant Corning.

The deal values US-based Optical Technology - which makes optical instruments - at $3.9bn and Pirelli is set to pocket a net $3bn from the sale of its 90% stake in the company.

The deal cements Corning's position as one of the leaders of the fibre optics sector, providing it with more production facilities which will allow it to meet the booming demand for its products.

It also marks the latest stage of Corning's transformation from a traditional glass company to a high-tech success story.

Networking giant Cisco owns the remaining 10% of Optical Technology.

Whizzing

Much of the data whizzing around the internet is transmitted via optical fibres that Corning and its competitors make.

Demand is high for these fibres and the shares of the companies that make them have been in demand on Wall Street.

But given the high price paid for the deal, it is unclear how Corning shares will move when the US market opens.

Valentino Romeri, analyst at Rasfin in Milan, called the price "astronomical".

"This seems very advantageous to Pirelli in terms of the amount it is going to get.

"It's very positive for the group. If you look at the other transactions that have been done in this sector they're not at this price level."

A statement from Pirelli said:"Thanks to this agreement, Pirelli will reinforce its leading technologies in optical fibres, optical cables and submarine optical systems, in energy transmission and in tyres, and will seize any further opportunity to create added value."