Latest News

Pirelli's Italian shareholders and Chinese investors clash over governance

Pirelli's Italian shareholders and Chinese investors clash over governance

Two sources claim that the Chinese and Italian Pirelli shareholders are in disagreement over the governance of the group. This could lead to the failure to approve Pirelli's financial results 2024 during a scheduled board meeting on Wednesday.

Sinochem, the state-owned Chinese company, is the biggest investor in Pirelli with a stake of 37%. This could affect the group's operations in the U.S. because Washington has been cracking down on Chinese automotive technology.

Sources said that discussions are underway about how to further reduce Sinochem’s influence over the company after the Italian Government intervened in 2020 to curb 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 as an alternative option.

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

This year, the U.S. finalised rules that prohibit key software and hardware from Chinese controlled companies in connected cars on American roads. Software prohibitions will take effect in 2027 and hardware prohibitions in 2029.

Some Pirelli tyres are equipped with a technology that can collect data while in motion and transfer the information to the vehicle in real-time.

Around 25% of the Italian tyremaker's revenues come from North America. The company mainly serves the North American market by tyre production from its plants located in Mexico, South America, Europe and a small share from its Georgia plant.

Camfim is the second largest investor in Pirelli, and it is owned by Marco Tronchetti Provera. He has been Pirelli's executive vice-chairman since 1992.

Italy, which in the year 2023 will act under the so-called "Golden Power" regulation, aimed at protecting assets that are deemed strategic to the country, has set rules for Pirelli governance. These include giving local shareholders the right to nominate the CEO of the group and the veto power over strategic decisions made by the Chinese-controlled Board.

Pirelli launched an internal evaluation process after the Italian government decided to limit the governance of Sinochem.

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

Sinochem's board of directors could not sign off on Pirelli’s full-year results report for 2024, released by the company last month, if there is no agreement on governance.

Camfin increased its stake in Pirelli over the course of 2024. It now holds a 26,4% stake, and plans to increase this to 29,9%.

(source: Reuters)