By Eric Sylvers
MILAN--China National Chemical Corp. agreed to buy a controlling
stake in Italian tire manufacturer Pirelli & C. SpA as part of
a deal that will see the two companies combine assets as they bulk
up to confront bigger rivals.
A unit of China National Chemical, known as ChemChina, will
initially pay about EUR1.8 billion to buy a 26% stake in Pirelli
owned by Camfin, an investment vehicle indirectly controlled by
Pirelli Chief Executive and Chairman Marco Tronchetti Provera. The
Chinese company will then launch a bid to buy the rest of Pirelli's
outstanding stock at EUR15 a share, slightly below Friday's closing
price.
China National Tire & Rubber Co., the ChemChina unit making
the acquisition, operates a range of businesses and is one of
China's largest tire makers. Gaining control of Pirelli--which
invested hundreds of millions of dollars in a large tire factory in
Yanzhou, China--will allow the Chinese state-owned company to
upgrade its technology and grow its market share at home. At the
same time, ChemChina could get greater access to the European
market while boosting global sales. Tire exports from China have
been a source of friction in U.S.-China trade negotiations.
The partnership will strengthen Pirelli's presence in China and
double the company's volume of industrial tires sold to about 12
million pieces a year, Camfin said in a statement. Pirelli's
industrial tire business will be integrated with some assets of
China National Tire & Rubber and Aeolus Tyre Co., a
Shanghai-listed company partially owned by ChemChina.
The acquisition is the latest in a line of Chinese investments
in Italy, with recent acquisitions by People's Bank of China
including stakes of about 2% in some of Italy's biggest and most
iconic companies, including Fiat Chrysler Automobiles SpA and oil
giant Eni SpA. The Pirelli investment is the first time since the
recent raft of acquisitions began that a Chinese company or entity
seeks to gain control of the Italian company it is investing
in.
Rick Carew contributed to this article
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