(Jan 7): Pirelli & C SpA is in talks with its largest shareholder, China’s Sinochem Group, over options that include reducing the Chinese conglomerate’s stake in the Italian tyremaker to about 10% to ease concerns over access to the US market, according to people familiar with the matter.
The proposal is among scenarios under review, the people said, asking not to be identified because the discussions are confidential. If implemented, it would reduce Sinochem’s holding from roughly 34% and reclassify the Chinese group as a passive investor, significantly curbing its influence.
The Italian government, which considers Pirelli a strategic asset, would welcome such an outcome, the people said. It is facilitating the talks and has been seeking a solution to the prolonged standoff between the company and Sinochem, the people added.
Another option for Sinochem is to sell its entire stake, the people said. Discussions are ongoing and no final decision has been taken, they said.
Resolving the impasse has become increasingly urgent as Pirelli seeks to safeguard its US business, the source of more than 20% of sales. The market underpins Pirelli’s bid to expand sale using its sensor-based Cyber Tyre technology.
Technology controls have become a crucial weapon in US–China trade tensions, as Washington seeks to limit Beijing’s involvement in sensitive technologies and supply chains. China has responded with its own controls and push for self-sufficiency.
See also: CEO of Castel Group fights bid by billionaire founder’s heirs to oust him
Washington is preparing to enforce rules that restrict connected-vehicle hardware and software linked to China, raising the risk that Pirelli could face limits in the US if Sinochem retains a significant role.
Representatives for Pirelli and Sinochem declined to comment. The Italian government declined to comment.
Shares of Pirelli advanced as much as 2.1% following the Bloomberg report. The stock rose 1.2% as of 2.08pm in Milan.
See also: Adidas gets rare sell as BofA sees slowing growth
The talks come as European governments face growing tensions with China over control of assets considered strategic. A rift over Dutch chipmaker Nexperia BV led to disruptions at European automotive plants last year, and the Group of Seven nations are working to counter China’s grip on critical minerals.
Italy has repeatedly used its golden power veto rules to manage Chinese stakes in sectors ranging from manufacturing to telecommunications, part of a broad European shift towards stricter screening of foreign investments.
Italy has already intervened to curb Sinochem’s governance powers under its so-called golden power regime. In April last year, at the request of Italian regulators, Pirelli’s board downgraded Sinochem’s status, declaring the Chinese conglomerate no longer had control. Two months later, at the company’s annual general meeting, Sinochem failed to block approval of the company’s annual financial statements.
Separately, Italy in September closed a golden-power probe focused on the conduct of Chinese-appointed directors.
The Financial Times reported earlier this week that the Italian government is also exploring the option of freezing Sinochem’s voting rights altogether under the golden power framework if a negotiated solution cannot be reached.
Uploaded by Felyx Teoh
