ChemChina is a state-owned conglomerate that also makes tires. Buying Pirelli gives them access to advanced tire manufacturing and gives Pirelli a leg-up in Asia.
A deal has been signed to put famed Italian tire maker Pirelli in the hands of the state-owned chemical conglomerate ChemChina. The deal is expected to be finalized this summer pending regulatory checks, reports Automotive News Europe. ChemChina will start by buying the 26.2-percent share of Pirelli owned by a company called Camfin, and then make a public tender offer for the balance of the shares.
In total, the deal is worth roughly $7.7 billion, and takes advantage of a weak euro to maximize Chinese buying power. The Chinese are investing heavily in Italy, and the Pirelli deal comes in the wake of a number of important acquisitions in Europe's third-largest economy, according to Reuters. The upshot of the deal for Pirelli is greater access to Asia's growing tire markets; for ChemChina, it's access to premium tire technology that can greatly boost their margins at home.
Pirelli is the world's fifth-largest tire manufacturer, and supplies tires to Formula 1 (among other motorsports). The ChemChina deal will be officially inked with the conglomerates's China National Tire & Rubber unit. Reuters reports that the deal will allow ChemChina to appoint a new chairman; Tronchetti Provera will remain the CEO.
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