Pirelli sidelines Chinese owner in clash over firm control

[MILAN] Pirelli took a first step to distance itself from its main investor, declaring on Monday (Apr 28) that China’s Sinochem no longer has control over the Italian tyre maker.

The company downgraded the governance status of the Chinese conglomerate following a request from Italian regulators. The board clashed over the decision, with five of the company’s Chinese directors opposing it and one abstaining, Pirelli said on Monday. The board is comprised of 15 members.

While the end of controlling status will not obligate Sinochem to sell its holding, it will effectively distance the company financially from Pirelli. The decision on Monday, previously reported by Bloomberg, follows years of wrangling over Pirelli, including moves by Italy’s government to curtail Sinochem’s influence.

Sinochem, which owns a Pirelli stake of 37 per cent through its Italian branch Marco Polo International, expressed “deep disappointment and strong opposition” to the decision. Sinochem also stated that the company has always strictly complied with laws and it will continue to exercise a dominant influence over Pirelli’s ordinary shareholders’ meeting.

Prime Minister Giorgia Meloni’s Cabinet in 2023 used a “golden power” veto to restrict the Chinese firm’s access to technical information collected by sensors in Pirelli tyres, citing concerns on what it deemed to be strategic data.

Sinochem subsequently came under review for a potential breach of Italian rules limiting China’s influence over strategically important assets.

The board decision also comes at a time when Pirelli is looking for ways to shore up its presence in the US as Washington prepares to prohibit the import or sale of connected vehicles containing hardware or software linked to China.

Milan-based Pirelli, which traces its roots back to the 1870s, supplies tyres to manufacturers including Ferrari, McLaren Automotive and Bentley Motors. About 80 per cent of the company’s sales are in the high-value segment. Pirelli’s board on Monday also confirmed full-year targets and reported a higher dividend than analysts had expected.

Pirelli executive vice-chairman Marco Tronchetti Provera, a stalwart of the Italian business establishment, has raised his stake in the company, and has said he wants to get close to a 30 per cent holding. BLOOMBERG