CNRC (ChemChina), Camfin and its shareholders have announced that all the necessary antitrust and regulatory approvals for ChemChina’s purchase of the majority of Pirelli (as announced on 22 March 2015) have been obtained. Therefore the aforementioned parties have agreed to complete the transaction on 11 August 2015. As a result, the pre-announced mandatory tender offer for the remaining shares (at 15 euros each) will be triggered.
ChemChina (China National Chemical Corp) has gained European Union antitrust approval for Pirelli takeover. According to a Reuters report, the completed transaction would give the combined company a 10 per cent market share. As a result, ChemChina unit China National Tire & Rubber is now expected to go ahead with plans to set up a joint venture to acquire a 26.2 per cent stake from Italian holding firm Camfin and then make a mandatory takeover bid for the rest of Pirelli.
On 4 June, Pirelli’s largest single shareholder, ChemChina announced that it had set up ChemChina (UK) Ltd., as a wholly owned subsidiary of ChemChina Petrochemical Co., Ltd. According to the company, this business serves as “a London-based trading platform that will effectively complement its sister company ChemChina (Singapore) Pte. Ltd. to build around-the-clock trading networks covering various fields”.
Ren Jianxin, chairman of China National Chemical Corporation (ChemChina) and Igor Sechin, President of Rosneft, signed an equity investment and crude oil supply deal on 20 June 2015 during the St. Petersburg International Economic Forum.
Following the news that ChemChina now controls (both directly and indirectly) 30 per cent or more of Pirelli shares with a view to buying as much as 70 per cent of the company, Italian news reports suggest a number of smaller shareholders are forming an alliance in order to push for a higher offer price from ChemChina.
Today we at Tyres & Accessories published our annual ranking of global tyre manufacturers on our tyrepress.com website. As always, this yearly survey takes the turnover of the industry’s leading players into account and also provides information on operating profit/EBIT(DA) and annual net income.
Following the news that China National Tire & Rubber Co. (CNRC), a subsidiary of China National Chemical Corporation (ChemChina), entered into a binding agreement with Edizione with respect to the purchase of 1.574 per cent of the share capital of Pirelli on 13 April, company representatives have issued a clarification that these shares are held indirectly.
Following news of the company’s plans to takeover Pirelli based on purchasing Camfin’s leading shareholding in the Italian tyre manufacturer, ChemChina has revealed that it has made a deal with Edizione Srl for an additional Pirelli stake. The latest share purchase suggests ChemChina is in the second phase of its acquisition en route to a publically stated goal of owning 65 per cent of Pirelli.
After the second grand prix of the second year of Pirelli’s second three-year stint as exclusive Formula One tyre supplier, Motorsport director Paul Hembery addressed questions about its F1 programme in the ChemChina-owned era. “For us, it’s business as normal,” Hembery told motorsport magazine, Autosport. Indeed, the centrality of top-level motorsport to the manufacturer’s brand – “Motorsport for Pirelli remains key,” in Hembery’s words – is an obvious attraction to a Chinese company buying into the premium manufacturer’s market positioning.
In case you haven’t heard, as much as 65 per cent of Pirelli is in the process of being sold to ChemChina. It’s a complex plan and there’s a long road ahead, but the deal has been done and so takeover wheels are in motion (see page 28 for complete coverage of this part of the story). So what’s next? The deal can’t fail to have an impact at Pirelli, but what about the other top five tyre manufacturers and beyond? We hinted at market consolidation in this column last month, with reference to restructuring proceedings at Shandong Deruibao Tire Co., Ltd and possible contagion in China; and Pirelli CEO Marco Tronchetti Provera made the market aware of that he was planning to sell his stake within two years in January 2014. But few would have named this particular bidder and this particular timing. Now we are faced with the possibility, even the likelihood that the Pirelli/ChemChina deal is going to precipitate further micro and macro consolidation within the tyre market – even a re-shuffle of the tyre industry’s top 10.
ChemChina’s chairman, Ren Jianxin, has publically reiterated his and his company’s commitment to completing its proposed takeover of Pirelli. Speaking to the Financial Times, Ren quoted a Chinese proverb and explained: “…It means that one must do everything in one’s power to facilitate a marriage. We are hoping that all the pieces can come together for our wonderful marriage with Pirelli.”
With coverage of ChemChina’s purchase of Pirelli waning, various newswires have been reporting market rumours that Bridgestone has been preparing a counterbid for Pirelli. However, in an interview with Reuters on 26 March, Pirelli CEO Marco Tronchetti Provera said that such a move would be “a disaster”. He supported ChemChina’s bid, on the other hand, saying it is: “good for the future of Pirelli and guarantees its global growth”.
On 22 March 2015 Pirelli was sold to ChemChina in a move that was both broadly expected and yet surprising at the same time. Expected inasmuch as Pirelli’s top management had been hinting at an exit for the last couple of years. Surprising due to the identity of the successful bidder and because of the speed at which the acquisition appears to have been agreed. But it was not a surprise who had been in high level talks with the Chinese for around three years. Here Tyres & Accessories compiles the latest details relating to the enormously influential story and considers what the impact will be on the company itself as well as the wider market place.
Following confirmation that ChemChina is set to buy Pirelli, the Italian manufacturer’s CEO, Marco Tronchetti Provera, has sought to re-assure employees that “the agreement with the Chinese will have no impact on employment”. Specifically this means R&D will remain in Italy, for example. For his part, Tronchetti was characteristically upbeat about the deal: “The opportunity with a partner like ChemChina is for the company to become bigger and to have a more effective penetration of the Asian market.”
Following the news that Pirelli is effectively being bought by ChemChina (the state-owned parent company of Chinese brands including Aeolus), further details – namely the implications of the transaction on the truck tyre sector – are continuing to emerge.
According to various news sources, it now looks likely that the Italian company’s truck tyre business will be merged with Aeolus Tyres (which is itself best-known for its commercial vehicle tyre products). Reuters made this claim by citing a statement from former Pirelli controlling shareholding company Camfin, which said Pirelli’s truck and industrial tyre business would be “folded into ChemChina’s listed unit Aeolus, allowing it to double its output”.