China National Chemical Corp. (ChemChina) has agreed to buy Pirelli, the world’s fifth largest tiremaker, in a 7.1 billion euro (US$7.7 billion) deal.
The acquisition, which will place one of the symbols of Italy’s manufacturing industry in Chinese hands, is the latest in a string of takeovers in Italy by cash-rich mainlanders who are taking advantage of a weak euro, according to Reuters.
It will give state-owned ChemChina, led by acquisitive chairman Ren Jianxin, access to technology to make premium tires which can be sold at higher margins, and give the Italian firm a boost in the huge Chinese market.
ChemChina tiremaking unit, China National Tire & Rubber, will first buy the 26.2 percent Italian holding firm Camfin owns in Pirelli and launch a mandatory takeover bid for the rest.
The bid will be launched by a vehicle controlled by the Chinese state-owned group and part-owned by Camfin investors including Pirelli boss Marco Tronchetti Provera, Italian banks UniCredit and Intesa Sanpaolo, and Russia’s Rosneft, Camfin said in a statement.
The offer will be launched at 15 euros per share, valuing the group at 7.1 billion euros excluding net debt of almost 1 billion euros at the end of 2014.
The ChemChina unit plans to take Pirelli private.
On Sunday, Camfin said Pirelli’s less profitable truck and industrial tire business will be folded into ChemChina’s listed unit AEOLUS, allowing it to double its output.
The new Chinese owners will pick a new chairman while Tronchetti Provera, who started working in the tyre maker in 1986 after marrying a member of the Italian family that founded the firm, will remain chief executive.
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