China National Chemical Corp (ChemChina) is to buy the world’s fifth-largest tire maker Pirelli (PECI.MI), in a 7.1 billion-euro ($7.7 billion) deal that will put the 143-year-old Italian company in Chinese hands.
The deal, agreed with Pirelli’s top shareholders on Sunday, is the latest in a series of takeovers in Italy by cash-rich Chinese buyers taking advantage of a weak euro just as Europe is slowly emerging from economic stagnation.
ChemChina said it is buying 26.2 per cent stake in Pirelli Tyre S.p.A. from its biggest shareholder, Camfin S.p.A., which is controlled by the family of Pirelli Chairman Marco Tronchetti Provera. The company said it would offer to buy the remaining outstanding shares.
If completed the deal would value Pirelli at $8.8 billion, according to financial information provider Dealogic.
Pirelli’s industrial business would be hived off to ChemChina’s Aeolus industrial tire brand.
Assuming the deal is done, we doubt how it will affect Pirelli’s association in Formula 1. A new tender for F1’s tire supply will be conducted later this year, and Pirelli motorsport boss Paul Hembery has already said the company cannot commit to bidding until it knows what is happening with the regulations going forward. Now it might first need to figure out what’s happening with its own objectives.