VOL. 52 ISSUE 14 APRIL 7, 2015 P37
association with Russian Presi-
dent Vladimir Putin.
The Chinese company is seek-
ing Pirelli's advanced consumer
motorcycle and car tire technol-
ogy, and the prestige of an as-
sociation with its position as the
control tire supplier for Formula 1
and, on two wheels, to the World
Superbike Championship. Pirelli
on the other hand, with annual
sales exceeding $6.5 billion, and
a sales network covering more
than 160 countries, stands to
benefit from the resources and
growth potential the Chinese
company can offer. Unconfirmed
rumors persist, however, that
Japanese giant Bridgestone is
contemplating a rival bid.
Should its initial purchase of
the Rosneft stake go ahead,
ChemChina would then seek
to acquire the remaining stock
in the publicly-quoted 143-year
old Italian company, thus se-
curing control of Pirelli's intel-
lectual property, manufacturing
facilities and tire technology.
Assuming the initial stage of the
deal passes regulatory hurdles,
a mandatory tender offer for
Pirelli's remaining share capital
will be made at the same price
that ChemChina is paying for
CamFin's stake. Since this rep-
resents a considerable premium
over the recent average trading
price of Pirelli shares, it's likely
to be accepted by investors
worldwide. ChemChina would
become the majority owner of
Pirelli, with 67-year old Pirelli
CEO Marco Tronchetti Provera
(who has become well known as
one of Italy's most high profile
businessmen since marrying into
the Pirelli family 30 years ago)
staying on in his role for another
five years.
Tronchetti took over control of
Pirelli after his then-wife's father
Leopoldo Pirelli resigned in 1992
following a failed merger attempt
with Continental Tires. After that,
he aggressively restructured Pirelli
by selling non-core tire business
related units such as its cable and
fiber optics divisions. But then in
2001, he turned that strategy on
its head and led Pirelli's acquisition
of Italy's largest phone company,
Telecom Italia, from Roberto Cola-
ninno. After clashing with the Ital-
ian government over his strategy
for Telecom, Tronchetti eventually
sold Pirelli's holding in the phone
company in 2007, returning the
company's focus once again to
tires.
Founded by Mr. Ren Jianxin
(who is proud of beginning his
working life by washing up tea
cups) the Beijing-based Chi-
naChem has a workforce of
140,000 employees and con-
sists of nine separate business
entities listed on the Shanghai
and Shenzen stock exchanges.
It had previously expressed
interest in acquiring the USA's
Ohio-based Cooper Tire and
Rubber concern, owner of Brit-
ish manufacturer Avon Tires,
but this was not pursued after
Indian tire major Apollo Tire
Co. reached an agreed deal to
acquire Cooper; a takeover that
was subsequently aborted.
If confirmed, the proposed
deal will give Pirelli a significant
slice of the growing Chinese
tire market on both two and
four wheels. Local two-wheeled
manufacturer CFMoto and
Chinese-owned Benelli QJ al-
ready fit Pirelli tires to their larger
capacity models and could raise
its global market share to 10
percent very shortly.
Alan Cathcart
PHOTOGRAPHY
BY
GOLD
&
GOOSE
Pirelli and
subsidiary Metzler
in process of being
purchased by
Chinese chemical
giant.
