Pirelli, the Chinese of Sinochem evaluate the sale of the shares after eight years – Corriere.it

The Chinese holding company Sinochem is considering leaving Pirelli. The indiscretion was reported yesterday by Bloomberg creating tension on the shares of Bicocca, which suffered a setback in Piazza Affari losing up to 4% to then recover and close up by 1.1%. Not the first time that rumors have circulated on the market of a disengagement by Chinese shareholders, which own 37% of Pirelli, in which they invested 8 billion dollars in 2015 through ChemChina which was later merged into Sinochem. According to rumors, the assessment of the possible sale would be linked to a simplification of the global portfolio. Sinochem Group controls, through Marco Polo, the majority of the tire group, in which institutional investors are present with 27%, Marco Tronchetti Provera’s Camfin with 14% and the Chinese government fund Silk Road Fund with 9%. Second Bloomberg the Beijing-based group is said to be in the early stages of reviewing its stake in Pirelli and has already encountered preliminary interest from several private equity firms. Pirelli shareholders are bound by a shareholders’ agreement renewed last year with a year in advance, which will enter into force in the spring with the approval of the 20220 accounts by the assembly and expires in 2026. The agreement establishes the rights of governance and management which assign the presidency to the Chinese, currently covered by Li Fanrong, and the operational management exercised by the executive vice president and CEO, Marco Tronchetti Provera and by Giorgio Bruno, deputy CEO, to the Italian shareholders.

Top of the range

The shareholders’ agreement leaves the hands free to the shareholders for the sale of the shares and if the hypothesis of a reorganization were to materialize, the Chinese shareholders would have no difficulty in selling their shares. Pirelli is one of the best-known tire brands in the world and has a strategy focused on the high-end that could be of interest to both larger competitors such as Michelin, Continental or Goodyear, more focused on the consumer market, as well as private equity funds. Pirelli a group with a turnover of over 5 billion with a profitability of more than 15% and in the top of the range it has double margins compared to the market average. In the recent past there had also been several times talk of a possible combination with Brembo, today a retail shareholder in Pirelli with 5.2% and the world’s leading manufacturer of braking systems, as part of a project for the creation of an Italian tire hub intelligent, a technological segment in which the Bicocca group is investing heavily.

The resignation of the director

An alliance with a player in the premium tire segment and an American private equity fund to create a European pole of excellence in the premium tire segment had also been studied by investment banks in more recent times. Yesterday the stock closed at 4.7 euros, bringing Pirelli’s capitalization to over 4.7 billion euros. The probable sale of the 37% stake would therefore be worth around 1.7 billion euro and the operation, should it receive the green light, would have to proceed with a beauty contest, an auction for many closed with a few selected investors, chosen for familiarity with the Milanese company or for the goodness of the enhancement proposals. Second BloombergSinochem could sell a partial stake or cede over time on the market: the option would protect Pirelli from the 30% threshold which would trigger the obligation to tender (to which they are not subject for long-term partners). Pirelli had to register Bai Xinping’s resignation from the board on Tuesday, in response to the assumption of new professional responsibilities in the Sinochem group. The step back will be effective starting next Wednesday, the day on which the board will decide on his replacement.