Chinese company acquire Pirelli in a deal for 7.1 billion EUR

Chinese company acquire the Italian tire manufacturer Pirelli in a deal for 7.1 billion EUR. The Chinese state-controlled corporation The China National Chemical Corporation (ChemChina) announced Sunday that it will attempt to acquire rival German Continental. Tires division of the Chinese corporation will initially take a share of 26.2%, the investor Cam Finanziaria SpA (Camfin) held by Pirelli. So far Camfin was the largest shareholder in Pirelli.

According to a joint statement the two companies have agreed on a purchase price of 15 EUR per share. Chinese company intends to make an offer for the rest of the traditional Italian company after the transaction. The other shareholders will be offered 15 EUR per share. This is slightly less than the closing price of 15.23 EUR per share of Pirelli at the end of the week on Friday. A successful transaction would be the largest transaction for the acquisition of a Chinese company in Italy. With the acquisition ChemChina, state-owned company headquartered in Beijing, will have access to technology for the production of premium tires. Pirelli in turn can expect a greater presence in the growing Chinese market.

Under the proposed agreement Pirelli will maintain its headquarters in Italy, and the shares will be held by the newly formed Italian company that will be controlled by unidentified partners, said Camfin. Camfin is majority owned by the Russian oil company “Rosneft” and the holding company of the Chairman of the Board of Directors of Pirelli Marco Provera. Russian giant “Rosneft” bought 13% of shares of Pirelli in March 2014, after the shareholders of the Italian company announced its intention to reorganize its investments. Among other shareholders are banks Intesa Sanpaolo and Unicredit.

Chemchina, known as China National Chemical Corp, is one of the largest industrial companies in the Asian country. Chemchina, which also has a tire factory, promised to support the expansion of global presence of Pirelli – the fifth largest tire supplier in the world. Europe is considered to be an attractive market for potential purchases because of the relatively low value of the euro at the moment and because of that Chinese companies face less political resistance in large transactions compared with the US.