China National Chemical Corporation (ChemChina) has agreed to buy Italy’s Pirelli, the world’s fifth-largest tyre manufacturer, in a deal valued at EUR7.1bn (US$7.7bn).
The acquisition will give ChemChina’s tyre-making unit, China National Tire & Rubber, access to advanced tyre manufacturing and product technology, allowing it to move into the high-margin premium tyre segment as well as giving it access to significant OEM and aftermarket contracts around the world.
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ChemChina will initially buy 26.2% of the Italian holding company Camfin, which owns Pirelli & C Spa, to be followed by a mandatory full takeover later on.
The deal is the latest in a string of takeovers of Italian and European companies by cash-rich Chinese firms, who are keen to take advantage of the weak euro and position themselves for the recovery of the Eurozone economy.
The offer has been accepted at EUR15 per share, which values the company at Euro7.1bn, excluding net debt of EUR1bn (at the end of 2014).
ChemChina is expected to delist Pirelli and take the company private once the deal is concluded.
The current chairman, Marco Tronchetti Provera, will continue his role as CEO, with the deal seen as a major step forward for China in the development of its domestic automotive industry.
