Brembo holds back on the Stock Exchange: the hypothesis of a wedding with Pirelli is back

MILAN. Is Pirelli in Brembo’s destiny? The Dutch move by the champion of brakes, determined to transfer the headquarters to Amsterdam to take advantage of the increased voting rules, have flexibility on capital – a substantial bargaining chip for future mergers – without affecting control, unleashes stock market speculation.

The Bergamo stock lost 6% to 13.53 euros, after having reached lows of 7.7% during the session. The timing of the operation and the relations already in place with Bicocca in the operations rooms turn the lights back on on scenarios of a possible marriage between brakes and tyres. In short, all eyes are on Pirelli, at the center of the news first for the decree with which the government activated the powers of the “golden power” by limiting the range of action of Sinochem’s Chinese shareholders (to 37%), then for the new turnaround on the future top with the step back of the designated Giorgio Bruno and the new indication by the shareholder Camfin (14%) of Andrea Casaluci, now general manager of operations, alongside the very confirmed Marco Tronchetti Provera, who will remain executive vice president. Brembo already has a foot in Pirelli with 6% and is linked to Camfin and Tronchetti by a consultation pact that came into force in February, for a renewable three-year term.

Brembo’s aim is to accelerate growth because the group from Bergamo is an icon in braking systems but remains small on the international scene compared to the components of the Continental or Bosch. The market expects, for example from Mediobanca, they write, a transformative operation, capable of radically changing its dimensions, also because the increased vote allows the Bombassei family to maintain control even with an important capital increase: in Amsterdam the rights of vote would rise from 70 to 78%. «Since there are no declared targets – write from Equita – we believe that Brembo can acquire other complementary companies (such as J.Juan and Sbs Friction) to accelerate the transition towards the system provider». However, they continue, it is inevitable “to think about the merger with Pirelli (which we confirm that we consider more positive for Pirelli): we estimate that with the vote” increased by 3 times, but which can reach 10, “the Bombassei family could have over 40% of the voting rights” of the combination “regardless of the exchange”. However, the market’s doubts focus on Pirelli’s debt (3.2 billion net) «which is high and would be detrimental to Brembo’s financial position», which has 506.4 million net debt, comments another analyst consulted. “The Dutch move was seen as the possibility of organizing the future structure of Pirelli around an Italian national hub”.

The market doubts the synergies, which could actually go beyond research and technology. Just think of the brands: both a flag of Made in Italy in the world, both suppliers of Formula One. Pirelli, therefore, remains an option, but the moment does not seem favourable. The Bergamo-based company seems to be one step behind a situation that remains fluid. By its tradition, Brembo is not prone to conflicts, especially with China, a crucial country for the car market and in which it has factories and investments. In Bergamo they are preparing great manoeuvres. Pirelli is a lead, but on the Stock Exchange it yields 1.27% while waiting for the situation to clarify and for the future moves of Sinochem to be understood, the Chinese partner who has suddenly become too cumbersome. —