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Pirelli sold to ChemChina
Chinese chemical firm buys tyre giant Pirelli in $9.8bn deal
25 Mar 2015
TYRE manufacturer Pirelli is being sold to China National Chemical Corporation (ChemChina) in a €7.1bn ($A9.8bn) deal that will see one of Italy's most iconic brands under Chinese ownership.
The agreement will initially sell off a 26.2 per cent stake of the holding company Camfin, which owns Pirelli, to ChemChina's tyre-making unit China National Tire and Rubber, but the remainder of the corporation will be handed over later, completing a full takeover.
Acquiring the prestigious tyre brand will drastically advance the Chinese company's technologies, allowing it to elevate the quality of its own products, while entering new markets around the world.
The deal will also allow Pirelli to inflate its presence in China's booming automotive industry.
The takeover is the latest in a string of deals in which Chinese firms have bought out European companies, taking advantage of a weakened Euro, but with the first signs of a Euro recovery, the Chinese companies stand to profit.
ChemChina made the near $A10bn offer after valuing each of Pirelli's shares at €15.
Pirelli says the binding agreement will enable it to achieve targets to double volumes from six to 12 million through a combination of the two company's assets.
While the sale is significant for the company, Pirelli's most senior executive has said Chinese ownership will not effect Camfin or Pirelli employees.
In an address to the company's staff, Pirelli chairman and CEO Marco Tronchetti Provera told employees the move would strengthen the company both in China and the rest of the world.
“The agreement with the Chinese will have no impact on employment,” he said.
“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. Our factories and employment in genera.”
Mr Tronchetti Provera also confirmed the company's headquarters and research and development would remain in Pirelli's native Italy, and the quality for which the company is known would not be effected.
“The Chinese partners appreciate our ability to produce tyres of very high quality and our factories, which are at the cutting edge worldwide,” he said.
“These are the points of strength in which we will continue to invest because they will allow us to maintain our leadership in the prestige segment, and to be among the leading producers in the premium segment.”
As well as providing original equipment and replacement tyres for all commercial and passenger vehicles in Australia, Pirelli is the sole tyre supplier to the Formula 1 Grand Prix series.
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