Russian petroleum industry colossus Rosneft reports the closure of its agreement to purchase a 50 per cent share in holding company Camfin S.p.A., which owns a 26.19 stake in Pirelli & C. S.p.A. This acquisition gives Rosneft a 13 per cent indirect share in the tyre maker and the right to nominate candidates for Pirelli’s Board of Directors – a right the company chose to exercise immediately. Five new Rosneft-nominated individuals joined the Board of Directors on 10 July, filling vacancies created by five resignations that were tendered that same day.
Late last month, Russia’s Rosneft disclosed it has attracted investments from pension capital funds and financial institutions to fund its 50 per cent acquisition of the holding company that owns 26.19 per cent of all shares in Pirelli & C. S.p.A., and can thus close the deal upon receiving approval from regulatory authorities. One the acquisition is given the green light under European, Italian and Russian law, the oil giant will indirectly hold a 13 per cent stake in Pirelli.
Rosneft president and chairman of the management board Igor Sechin has held negotiations with Pirelli’s top management including Marco Tronchetti Provera on the subject of expanding the two companies well reported cooperation.
Marco Tronchetti Provera does not expect Western Sanctions against Russia to have any impact on Rosneft’s acquisition of a 13 per cent shareholding in Pirelli. Reuters reports that the Pirelli chairman and CEO told journalists on the sideline of an event that “the timetable of the deal is confirmed, nothing has changed.”
For Pirelli, Russia is “still a developing market”, and as we found out a week or so after Tyres & Accessories interviewed global marketing vice-president Matteo Battaini at the recent Geneva Motor Show, Rosneft’s purchase of 13 per cent of Pirelli’s shares means Russia is also still a developing part of Pirelli’s ongoing business strategy.
Working on a share price of €12, which translates into a market capitalisation of €5.8 billion, Pirelli boss Marco Tronchetti Provera has arranged the sale of 13 per cent of all Pirelli shares to a majority state-owned Russian energy giant. With this transaction, Rosneft is set to become the largest single Pirelli shareholder. But even though his own shareholding will reduce to less than five per cent when the ink dries on the deal, Tronchetti will retain more or less free rein at Pirelli. While some market observers currently fear that the political situation in Crimea and the Ukraine may harm the deal, and others set their hopes upon the introduction of sanctions against Russia getting in the way, this article focuses on other questions – who Pirelli actually belongs to, who has the say at Pirelli, and how it is possible to control the Pirelli Group despite only having a minority shareholding?
Russian oil major, Rosneft has bought into Pirelli, taking control of 50 per cent of the holding group controlling Pirelli and a 13 per cent share of the tyre maker itself. The purchase makes the Russian group the largest single shareholder in Pirelli. The deal is being characterised as a solidification of the company’s partnership with Rosneft in Russia, which is seen as a access route to the emerging market for the tyremaker. However, Pirelli’s share price had fallen 2.24 per cent in response to the news (correct at time of publication).
The trading price of shares in Pirelli & C. SpA jumped to €12.96 late on 29 January after financial website FT Alphaville published information from “usually well-informed sources” about manoeuvres to change the company’s ownership structure. The release of a statement from Pirelli chairman and CEO Marco Tronchetti Provera denying any deal ensured the descent from this peak, however, and by 11:00am GMT today the share price had declined 7.3 per cent from this high to €12.01.
Marco Tronchetti Provera has already indicated he will divest his family’s share in Pirelli some time in the next few years, however the Italian tyre maker’s chairman and CEO has quashed speculation that he has received a proposal regarding a potential Pirelli sale. In a statement written on 29 January and published by Reuters, Tronchetti Provera described suggestions of a change in Pirelli’s ownership structure as “pure fantasy”.
An agreement signed between Pirelli and Russian oil and gas company Rosneft will see the Italian tyre maker’s products sold at the 1,800 service stations Rosneft operates in its homeland. The trade and marketing cooperative agreement was signed by Pirelli & C. S.p.A chairman and CEO Marco Tronchetti Provera and Rosneft Management Board president and chairman Igor Sechin; in a statement covering the deal, Pirelli says the heads of both companies underlined that the cooperation and business partnership between Rosneft and Pirelli is “built on the basis of sharing experience and potential for mutual benefit.”
Russian tyre manufacturer Sibur is to become state-owned company. After a long period of confusion about a possible merger between the gas monopolist Gazprom (that owns almost 100 per cent of Sibur’s shares) with the state-owned oil company Rosneft, the Russian government now has decided to take over the majority of Gazprom’s shares itself, according to Russian media reports. Currently the Russian government owns about 38 per cent of Gazprom but will increase this share up to more than 50 per cent by the end of June, when Gazprom’s annual shareholder meeting takes place. Sibur operates four tyre factories in Russia where it produced more than 15 million tyres in 2004.