Czech billionaire Michal Strnad is in talks to acquire a minority holding in Pirelli & C. from the tyre maker’s biggest shareholder, Bloomberg reported citing people familiar with the matter.
The proposed transaction is seen as a step that could reduce pressure surrounding China’s position in the Italian company.
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Bloomberg reported that Strnad is negotiating with state-backed Sinochem Holdings Corp. over the purchase of a 14% stake in Pirelli, the sources told the publication.
The discussions are continuing and there is no certainty that an agreement will be reached, the report said.
Any deal could also face obstacles, including the need for approval from Beijing.
At current market prices, a sale of that scale would be worth a little more than €1bn ($1.14bn), leaving Sinochem with about 20% of Pirelli.
Such a move would represent another step in efforts to curb Sinochem’s influence over Pirelli, an issue that has gained importance as the company develops its connected-tyre technology.
Sinochem’s shareholding in Pirelli has come under examination in the US, one of the company’s largest markets, amid concerns linked to national security and data sharing as Pirelli introduces its sensor-equipped Cyber Tyre products.
The Italian government has already used its golden power rules to restrict Sinochem’s role in Pirelli.
Those measures include limits on board representation and governance rights while the Chinese investor’s stake stays above 9.99%.
In recent weeks, Pirelli has also changed the composition of its board and senior leadership. Former chief executive and leading shareholder Marco Tronchetti Provera was appointed executive chairman despite opposition from the Chinese side.
A deal involving Strnad, who controls Czech defence group CSG NV, would add to European ownership within Pirelli.
Bloomberg said the main barrier to completing the transaction is approval from China’s State-Owned Assets Supervision and Administration Commission, the agency responsible for overseeing state-owned enterprises.
According to one of the people, the parties have discussed a basic pricing structure that includes a premium, and the earliest timing for a deal could be late July.
