Pirelli, best known as the sole tyre supplier for the Formula One Championship, is now set to be acquired by China National Chemical Corporation, popularly known as Chemchina. The 26.19 per cent stake in Pirelli that was previously held by Italian company Camfin S.p.A will now be sold off to the China National Tire & Rubber Co (CNRC) subsidiary.
The partial acquisition will then be followed by a tender from the state-owned Chinese corporation to buy the remaining shares for Pirelli at 15 each - at a 1.7 per cent markdown if you consider that the shares were valued at 15.26 apiece when the deal was announced. The Italian tyre maker is currently estimated to be worth7.1 billion (Rs48,542 crore).
Pirelli, despite its motorsport credentials (it's also the exclusive tyre supplier for the FIM World Superbike Championship), currently trails behind Bridgestone, Michelin, Continental and Goodyear, as the fifth largest tyre manufacturer in the world. The deal will help Pirelli make a foray into the thriving Chinese market, one of the largest in Asia. In turn CNRC, which manufactures steel radial tyres and off-road tyres for its domestic market will gain access to Pirelli's know-how and premium tyre technologies.
As per the terms of the deal, the operation and management of Pirelli will be kept intact, and Pirelli chairman and CEO, Marco Tronchetti Provera and his team will stay put. As of now, approvals from the Chinese and other international authorities are awaited for the deal to be completed.
On the announcement of the deal, Marco Tronchetti Provera said that "the partnership with a global player like Chemchina, through its affiliates, represents a great opportunity for Pirelli. CNRC's approach to business and strategic vision guarantee Pirelli's development and stability."
|Early morning of March 23 Beijing time, China National Chemical Corporation (ChemChina) through its wholly owned subsidiary China National Tire & Rubber Co. (CNRC) signed with Camfin S.p.A. (CF) and its shareholders the agreement with respect to the purchase at Euro 15 per share of stake representing 26.2% of the share capital held by Camfin in Pirelli listed on Milan Stock Exchange, and the joint tender offer by ChemChina, CF and other investors on the remaining stake following the completion of the purchase. Pursuant to the agreement, operation and management team of Pirelli will be kept stable, and new business growth strategy will be defined. The transaction is subject to approvals by the competent Chinese and foreign governmental authorities. As the fifth largest global tire manufacturer, Pirelli enjoys a history of more than 140 years in tire R&D and manufacturing, with sales revenue exceeding Euro 6 billion and a sales network covering more than 160 countries and regions. It ranks first in the premium tire segment worldwide, and is currently the sole tire supplier to Formula 1. CNRC is a domestic industrial leader in the manufacturing of all steel radial tires and off-the-road tires, and the largest producer of auto break hose and high strength conveyor belt in China, with export markets in more than 140 countries and regions. The acquisition will create long term industrial value in the tire sector, strengthen Pirelli's development plans, reinforce the coverage of strategic geographical areas, and through integration, enable the company to double its volumes in the industrial tire business. Mr. Marco Tronchetti Provera, Chairman and CEO of Pirelli, stated that "the partnership with a global player like ChemChina, through its affiliates, represents a great opportunity for Pirelli. CNRC's approach to business and strategic vision guarantee Pirelli's development and stability". Mr. Jianxin Ren was also full of expectation for the partnership, "we are delighted with the opportunity to team up with Mr. Marco Tronchetti Provera and his team to continue to build together a world class organization and a market leader in the global tire industry".|