Latest News

Pirelli shareholders from China and Italy clash over governance

Pirelli shareholders from China and Italy clash over governance

Two sources claim that the Chinese shareholder is a potential obstacle to the Italian tyremaker’s plans to expand its business in the United States.

Sinochem, a state-owned Chinese company, is the biggest investor in Pirelli. Sinochem holds a 37% share in Pirelli. This is at a time that China is the top cyber and military threat to the United States, according a report published by U.S. Intelligence agencies on Tuesday.

Washington has cracked down on Chinese automotive technology, banning software and hardware that are controlled by Chinese companies from being used in U.S. roads.

Vehicles that will be sold in these years are already being designed, even though the software and hardware prohibitions do not take effect until 2027 and 2029 respectively.

Pirelli's tyres are equipped with a technology that can collect data while in motion and transfer it to the vehicle in real-time. Pirelli could suffer a setback in its technology in the U.S., which would have an impact on global sales.

Around 25% of the revenues generated by Italian tyremakers come from North America, where they mainly serve customers through their plants in Mexico, South America, and Europe.

The group operates a smaller facility in Georgia, a state in the United States. Marco Tronchetti Provera, Pirelli's Executive Vice-Chairman, said that Pirelli might consider increasing its U.S. production to minimize the impact of potential tariffs.

Pirelli's Chinese owner could be a barrier to new investments in America.

STAKE REDUCTION?

Sources said that discussions are underway between Pirelli, Sinochem and the Italian government on how to reduce the Chinese conglomerate’s influence over the tyremaker. This follows the Italian intervention in 2023, which aimed to limit the Chinese group’s power and protect the autonomy of Pirelli's management.

One source said that Rome could remove Sinochem's voting right in Pirelli.

Rome also supported the European Union's tariffs against Chinese electric vehicles last year.

Sinochem representatives were not available to comment. Pirelli also declined to comment.

Camfim is the second largest investor in Pirelli, and it's owned by businessman TronchettiProvera who has been Pirelli's leader since 1992.

Pirelli launched a formal internal process in order to assess the level and scope of Sinochem's control after the Italian government imposed governance limits.

Sources said that a final decision is expected to be made on Wednesday at the board meeting. Pirelli is leaning towards stating that Sinochem no longer controls the tyremaker.

If Sinochem's board does not reach a consensus on governance, it could vote to reject Pirelli’s full-year results report for 2024, which was released last month. (Reporting and editing by Keith Weir.)

(source: Reuters)