State-owned ChemChina is set to buy Italian tyre maker Pirelli in a deal worth 7.1 billion euros. The deal with the world’s fifth-largest tyre producer will place one of the symbols of Italy’s manufacturing industry in Chinese hands.
The deal is among a string of takeovers in Italy by cash-rich Chinese buyers who can take advantage of the current weakened euro.
The agreement would give Beijing-based ChemChina access to technology used in making lucrative premium tyres and could help China, already a global player in sectors such as telecoms and internet, develop its automotive industry.
In turn Pirelli, whose tyres equip cars in Formula One motor racing, would have more bandwidth to compete against larger rivals such as Michelin and Continental which are looking for growth in Asia.
The ChemChina's tyre making unit, China National Tyre & Rubber will first buy the 26.2 percent that Italian holding firm Camfin owns in Pirelli, and will then launch a mandatory takeover bid for the rest.
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.
"We're pleased to have this opportunity working with Tronchetti and his team and continue to build together a world-class entity and a market leader in (the) global tyre business," said ChemChina Chairman Ren Jianxin.
Excluding the financial sector, Italy is the second-biggest acquisition market for China in Europe and fifth-largest worldwide, with 10 deals completed since the start of 2014, according to Thomson Reuters data.