Pirelli Tires To Be Sold To ChemChina
China National Chemical Corp. (ChemChina) will buy Pirelli, the world’s fifth-largest tire maker, in a 7.1 billion euro deal that will place one of the symbols of Italy’s manufacturing industry in Chinese hands. The deal will give state-owned ChemChina, led by acquisitive chairman Ren Jianxin, access to technology to make premium tires, which can be sold at higher margins, and give the Italian firm a boost in the huge Chinese market.
In turn Pirelli, whose tires equip cars in Formula One motor racing, would have more bandwidth to compete against larger rivals such as Michelin and Continental which are looking for growth in Asia.
The deal was agreed with Pirelli shareholders on Sunday. ChemChina agreed to pay 15 euros a share for the 26.2 percent of Pirelli owned by Cam Finanziaria, or Camfin, the companies said in a statement. ChemChina will then make a public tender offer for the rest of the tiremaker at the same price. The bid price, which values Pirelli at about 7.1 billion euros, is below Friday’s closing price of 15.23 euros.
In 2013, ChemChina generated revenue of 244 billion yuan (USD39 billion). ChemChina will carry out the transaction by its subsidiary China National Tire & Rubber Co. The company expects the deal to close in summer 2015, depending on receiving regulatory approvals.
The deal is the latest in a string of takeovers in Italy by cash-rich Chinese buyers, who can take advantage of a weak euro just as signs emerge that Europe is coming out of economic stagnation. The bid also marks a return of China’s state-owned enterprises (SOEs) to global dealmaking following a hiatus prompted by President Xi Jinping’s anti-graft crackdown that targeted several current and former senior SOE officials.
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