Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Pirelli’s board is pressing China’s Sinochem, its largest investor, to cut its stake over fears that the Trump administration’s hawkish position on Beijing ownership of American assets will thwart the Italian tyremaker’s US expansion.
At a board meeting on Wednesday, Pirelli’s management will demand the Chinese investor immediately cut its 37 per cent stake to less than Italian shareholder Camfin’s 26.4 per cent holding, according to several people with knowledge of the plans.
The move demonstrates the drastic steps being taken by companies as they adapt to the policies of US President Donald Trump’s administration.
Korean car group Hyundai on Monday was the latest international business to announce large investments in the US, unveiling a $21bn package that Trump said was evidence that his trade policies “very strongly work” as he seeks to boost domestic manufacturing.
One of the options Pirelli proposed is for Sinochem to reduce its stake below 25 per cent through a share buyback with some stock being resold on the market immediately, people with knowledge of the plans said.
It is unclear whether Sinochem, which will be represented at the meeting by its president Jiao Jian — also Pirelli’s chair — will agree to the proposal. The parties failed to reach an agreement in preparatory talks ahead of the board meeting, the people added.
Pirelli declined to comment. Sinochem could not immediately be reached for comment.
Pirelli owns a factory in the US state of Georgia but produces most of its tyres for the North American market in Mexico and South America. In response to Trump’s trade policies and the looming threat of tariffs on imported cars, it has sought to expand its operations in the US, where it makes a quarter of its global revenues.
But the tyremaker has met resistance in recent conversations in the US about its expansion plans, according to people with knowledge of the matter. The company believed that this stemmed from the fact its largest shareholder was a Chinese state-owned company, the people added.
Pirelli, which supplies the tyres used by Formula 1 cars, also owns proprietary technology that can link information picked up by tyre sensors to vehicles’ driving commands. The technology is in high demand in the US but Pirelli also fears it will be cut out of a potentially lucrative market because of Sinochem’s stake in the group, according to the people.
The US in January finalised a ban on Chinese automated driving systems as well as hardware and software that interact with cars, such as Bluetooth, WiFi and satellite.
State-owned ChemChina, which later merged with Sinochem, first bought a majority stake in Pirelli in a $7.7bn deal in 2015. Under the initial deal, the Chinese investor agreed it would not interfere with the Italian group’s day-to-day management, strategy or appointments.
This week’s showdown comes less than two years after Italian Prime Minister Giorgia Meloni’s government imposed limitations on state-owned Sinochem’s shareholder rights in Pirelli.
The rare state intervention, under Italy’s “golden power” foreign investment screening mechanism, followed repeated clashes between Pirelli’s Italian management, including its former chief executive Marco Tronchetti Provera, and Sinochem as Beijing sought to tighten its grip over one of Italy’s historic industrial groups.
Sinochem’s attempts to exert control at a time of heightened geopolitical tensions led to disputes with Pirelli’s management. The disagreements culminated with Sinochem’s attempt in 2023 to revise a shareholder pact and strip Camfin — where Tronchetti Provera is the controlling shareholder — of the indefinite right to appoint Pirelli’s chief executive.
Credit: Source link
