Advanced Search

The story appears on

Page A11

March 24, 2015

GET this page in PDF

Free for subscribers

View shopping cart

Related News

Home » Business » Energy

ChemChina in US$7.7b deal to buy Pirelli

Source: Agencies | March 24, 2015, Tuesday | Print Edition

CHINA National Chemical Corp (ChemChina) is to buy into Pirelli, the world’s fifth-largest tire maker, in a 7.1-billion-euro (US$7.7 billion) deal.

The deal, agreed with Pirelli’s top shareholders, is the latest in a series of takeovers made in Italy by cash-rich Chinese buyers, who can take advantage of a weak euro just as signs emerge that Europe is coming out of economic stagnation.

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.

Some traders said ChemChina may have to lift its bid to win over shareholders.

“The success of the likely public offer at 15 euros cannot be taken for granted,” Banca Akros said in a note.

But if successful the deal will give state-owned ChemChina, led by acquisitive Chairman Ren Jianxin, access to technology to make premium tires, which can be sold at higher margins, and give the Italian firm a boost in the huge Chinese market.

The bid for 143-year-old Pirelli marks a return of China’s state-owned enterprises to global dealmaking following a hiatus caused by President Xi Jinping’s anti-graft crackdown that targeted several current and former senior officials at state companies.

It would be China’s fifth-biggest outbound deal by a state-owned firm, according to Thomson Reuters data, and the first major acquisition since China’s MMG Ltd led a consortium last year to buy the huge Las Bambas copper mine in Peru from Glencore.

Under the proposed deal ChemChina’s tire making unit, China National Tire & Rubber, will enter into a joint venture which will first buy the 26.2 percent stake that Italian holding firm Camfin owns in Pirelli. The venture will then launch a mandatory takeover bid for the rest of Pirelli, the companies said in a statement.

The bid will be launched by a vehicle controlled by the Chinese state-owned group and part-owned by Camfin investors, who include Pirelli boss Marco Tronchetti Provera, Italian banks UniCredit and Intesa Sanpaolo, and Russia’s Rosneft.

Rosneft bought a 50 percent stake in Camfin a year ago, before the onset of the Russian economic crisis. The oil company will remain a Pirelli investor after the buyout but it is unclear at this stage what its final stake will be.

The new Chinese owners will pick a new chairman while Provera, who started working in the tire maker in 1986 after marrying a member of the Italian family that founded the firm, will remain chief executive.

Italian press reports mentioned the possibility of a counterbid by a major European competitor like France’s Michelin or Germany’s Continental.

BusinessEnergy


 

Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend