ChemChina considers stake sale in Italian tyre maker Pirelli

An employee trims an automobile tire during assembly at the Pirelli & Co. SpA production plant in Merlo, Buenos Aires Province, Argentina, on Wednesday, Aug. 9, 2017. The National Institute of Statistics and Censuses is scheduled to release industrial production figures on August 31. Photographer: Erica Canepa/Bloomberg

China National Chemical Corp. is considering reducing its stake in Italian tiremaker Pirelli & C. SpA as part of a strategic review of the Chinese group’s overseas investments, according to people familiar with the matter.

ChemChina, as the state-owned firm is known, is considering a number of options for its stake, including a block sale on the market that would increase Pirelli’s free float or selling to an investor, they said. Discussions are at an early stage and no final decisions have been made on the size or the timing of the potential sale, said the people, who asked not to be identified because the deliberations are private.

ChemChina’s indirect interest in Pirelli is worth about 2.1 billion euros ($2.4 billion) based on Tuesday’s closing price, according to data compiled by Bloomberg. The Chinese group controls Pirelli’s biggest investor, Marco Polo International Italy, which owns around a 45 percent stake in the Italian tiremaker.

Any transaction would depend on ChemChina getting an attractive price for the shares, the people said. A representative for ChemChina didn’t immediately answer phone calls and a fax seeking comment.

Pirelli shares fell as much as 4 percent to 5.83 euros in Milan trading, giving the company a market value of 5.88 billion euros.

“We’re very happy with ChemChina as a stakeholder, because we have very clear agreements,” Pirelli Chief Executive Officer Marco Tronchetti Provera said Monday in a Bloomberg Television interview. “They’re a financial investor that is really supportive without interfering in the management.”

The Chinese conglomerate is looking for ways to reduce debt from its $43 billion purchase of Swiss pesticide producer Syngenta AG in 2017. ChemChina has been studying potential asset sales as it moves ahead with preparations for a long-mooted megamerger with state-owned Sinochem Group, people familiar with the matter said in September.

Pirelli, which makes tires for luxury brands including Ferrari, McLaren and Bentley, generates about 83 percent of its profit from high-value tires. The company is expecting double-digit growth in its Chinese market this year.

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Bloomberg

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

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