Pirelli ends Sinochem's 'control' to safeguard US market position

Milan, Italy – Pirelli’s board of directors has voted to end the control of Marco Polo International (MPI), Sinochem’s investment vehicle, over the Italian tire maker.

The board cited the Italian government’s 2023 ‘golden power decree’ to revoke the control, stating that the Milan-based group was “not subject to control of any entity.”

In a 28 April statement, Pirelli said the decision to revoke Sinochem’s control was a “first, but not decisive, step” towards ensuring that its governance is in compliance with US regulatory requirements.

The US, its statement added, is “a key market” for Pirelli’s ‘high value’ large rim-sized tire products as well as for its ‘cyber tire’ connected-tire technology.

In 2023, the Italian government exercised its ‘golden power’ rule on Pirelli to reduce major shareholder Sinochem’s influence over the tire maker.

Under the 'golden power' rule, Rome regulators can impose conditions or veto transactions, investments or corporate resolutions that threaten Italian public interests.

In a separate statement on 28 April, MPI expressed “deep disappointment and firm opposition" to the decision of the Pirelli board.

MPI argued that the 2023 government decree did not include any provision that deprived it of control over Pirelli and that it actually “presupposes it".

Among other things, MPI said it continues to hold a significant percentage for the 'exercise of a dominant influence in the ordinary meeting.'

Of the 15 Pirelli board members, chairman Jiao Jian, and directors Chen Aihua, Zhang Haitao, Chen Qian and Fan Xiaohua, voted against the decision. Another director Grace Tang abstained.

In a subsequent statement, Pirelli defended its decision, stating that it “confirms the correctness of the analysis conducted by the management and approved by the board of directors.”

The 'golden power' rule, it stated, defines "a web of measures operating overall to protect the autonomy of Pirelli & C. SpA and its management.

"A management not nominated by the shareholder Sinochem and whose autonomy and continuity protect the industrial culture of Pirelli."

Through MPI, Sinochem holds a majority share of 37% in Pirelli, while Camfin, led by Italian businessman and former Pirelli CEO Marco Tronchetti Provera holds a 26.4% stake in the tire company.

The remaining shares in Pirelli are held by institutional investors and retail shareholders, according to information on the group's website.