MILAN: China National Chemical Corp, the tyre making division of ChemChina, to acquire Pirelli, one of the largest tyre manufacturers of the world, in 7.1 billion-euro deal. This takeover will put Italian tyre marque into the hands of the Chinese company. The most recent takeover made in Italy by the Chinese organizations was agreed with Pirelli’s top level shareholders.
The offer will be launched at 15 euros per share, valuing the Italian group at 7.1 billion euros excluding net debt of almost 1 billion euros at the end of 2014. The ChemChina unit also envisages taking Pirelli private.
However, with this deal can prove to be really beneficial for the Italian tyre maker in the Chinese market. If the deal will come as a successful venture then the chinese chemical company will get rights to technology to make high quality tyres in china. These products can be marketed and sold at higher margins. Therefore, Pirelli will get a boost in the Chinese automotive and tyre market.
According to the proposal made, China National Tyre & Rubber, the tyre making division of ChemChina, will get into a joint venture in which it will buy the 26.2 percent stake of Pirelli at first, that is owned by a company called Camfin. After that, a mandatory takeover bid will be proposed for rest of the shares of the Italian tyre maker.
While, ChemChina will pick a new chairman after the acquisition, Tronchetti Provera will remain the Chief Executive Officer of Pirelli.