Italian Government Blocks Chinese Takeover Attempt of Pirelli

The Italian government has thwarted an audacious takeover attempt by Sinochem, a company owned by the Chinese government, to seize control of Pirelli, Italy's tire behemoth.

by Faruk Imamovic
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Italian Government Blocks Chinese Takeover Attempt of Pirelli

The Italian government has thwarted an audacious takeover attempt by Sinochem, a company owned by the Chinese government, to seize control of Pirelli, Italy's tire behemoth. The thwarted acquisition comes amidst an increasingly frosty relationship between Beijing and Western nations, BBC reports.

Sinochem is currently Pirelli's most prominent shareholder, boasting a hefty 37% stake. However, recent developments reveal the Italian government has moved to quell this burgeoning influence. Pirelli announced to its investors this Sunday that the government has determined only Camfin, a firm under the control of Pirelli's CEO, Marco Tronchetti Provera, has the authority to nominate directorship candidates.

Golden Power Procedure: Safeguarding Strategic Assets

The decision followed Sinochem's announcement to the Italian government in March of its intent to refresh and modernize the existing shareholders' agreement. Italian Prime Minister Giorgia Meloni's administration has subsequently scrutinized this agreement under the lens of the so-called "Golden Power Procedure." This policy, aimed at preserving companies that are deemed strategically significant to the nation, has proven instrumental in Pirelli's case.

It underscores the government's resolve to regulate changes in the company's corporate management rigorously. In 2015, Pirelli was purchased for a staggering €7.1 billion by a consortium of investors, including ChemChina and Camfin.

Six years later, a merger took place between ChemChina and Sinochem, another Chinese government-owned entity. The Silk Road investment fund, another Chinese player, holds a 9% stake in Pirelli.

High-Level Diplomatic Moves Amidst Tense Relations

The tire giant's situation unfolds while US Secretary of State Antony Blinken is in Beijing on an infrequent visit to China.

His diplomatic trip emerges amidst escalating tensions between China and many Western countries due to trade disputes, Taiwan's status, and security concerns. Before Blinken's visit, speculation suggested little hope of significant progress on the manifold disagreements between the world's two economic superpowers. One of these thorny issues is the US's endeavors to decelerate the growth of China's chip industry.

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