State-owned ChemChina reportedly agreed to terms to buy the 143-year old tire company late on Sunday night. ChemChina will pay 15 euros per share to buy Pirelli, valuing the company at about 7.1 billion euros, or roughly $7.7 billion.
According to Reuters, ChemChina’s China National Tire & Rubber tire making unit will initially form a joint-venture to acquire a 26.2 percent stake in Camfin, the Italian holding firm that owns Pirelli. The venture will then move to acquire the rest of Pirelli.
Tronchetti Provera will remain on as CEO of Pirelli, although the 29-year company vet will be replaced as chairman.
It remains possible that either Michelin or Continental could make a counter bid for Pirelli, but that looks unlikely at this point.
ChemChina’s purchase of Pirelli will give the state-owned firm a slice of the high-margin premium tire market. Pirelli, meanwhile, will benefit from greater exposure to the Chinese market, which is the world’s largest in terms of overall auto sale.
Pirelli’s less profitable truck and industrial tire business will be rolled into a separate subsidiary of ChemChina.
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