ChemChina lines up €7.1bn takeover of Pirelli

Beijing – China National Chemical Corp. (ChemChina) is to purchase 26.2 percent of the share capital held by Camfin SpA (CF) in Pirelli, as part a takeover bid for the tire company.

The purchase, through Chem China subsidiary China National Tire & Rubber Co. (CNRC), is at €15 per share in the Milan – valuing the Italy-listed company at around €7.1 billion.

The deal also covers a joint tender offer by ChemChina, CF and other investors for the remaining share in Pirelli. This would follow the completion of the purchase CF’s stake – subject to approvals by Chinese and other authorities.

The partnership with ChemChina represents a “great opportunity” for Pirelli, according to Marco Tronchetti Provera, chairman and CEO of Pirelli.  “CNRC’s approach to business and strategic vision guarantee Pirelli’s development and stability," he said.

The acquisition, said ChemChina, would 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.”

News agency Reuters had reported that the deal was agreed with Pirelli shareholders on 22 March, and suggested that the “cash-rich Chinese buyers” were currently taking advantage of a weak euro in the Italian market.

“It will give state-owned ChemChina, led by acquisitive chairman Ren Jianxin, access to technology to make premium tires, which can be sold at higher margins, and give the Italian firm a boost in the huge Chinese market,” added the Reuters report.

Camfin said in a statement that the partnership would strengthen Pirelli’s presence in China and double the company’s volume of industrial tires sold to about 12 million pieces a year.

Pirelli is the world’s fifth largest tire manufacturer and operates a sales network covering more than 160 countries and regions.

ChemChina is a China state-owned enterprise under the administration of the State-owned Assets Supervision and Administration Commission of the State Council, established in May 2004 with the approval of the State Council.

With annual sales of $39.4 billion in 2013, ChemChina is considered China's largest chemical company and 19th among the world's top 100 chemical corporations. It is ranked by Fortune magazine on its Fortune 500 list.

ChemChina is active in six sectors: new chemical materials; basic chemical materials; oil processing; agrochemicals; rubber products; and chemical equipment, according to ChemChina’s website.

China National Tire & Rubber describes itself as China’s largest producer of off-road tires, controlling the brand names Aeolus, Double Happiness, Rubber Six, Torch and 7425, and it is a leading producer of rubber conveyor belt, auto rubber hose and air conditioner hose. It lists assets of $2.4 billion.

Among its tire industry holdings are Aeolus Tyre Co. Ltd.; ChemChina Guilin Tire Co.;Ltd.; Double Happiness Tire Industrial Co. Ltd.; and Qingdao Yellowsea Rubber Co. Ltd.