On Friday, Italy’s government notified that it had conceived steps to decrease the influence of China’s Sinochem on its own tyre making firm Pirelli. The step also comprised suggestions from a mandatory qualified majority for strategic decisions made by the board of the company.
Image Source: Pirelli Facebook Page
The step was taken soon after Sinochem, the largest shareholder of Pirelli with a 37 per percent stake, informed informed the Italian administration about its plans to renew an existing shareholder partnership with camping this March. Camfin is the vehicle of Pirelli CEO Marco Tronchetti Provera.
The administration at Rome examined the aforementioned partnership under “Golden power“ rules which are directed to protect assets deemed strategic for the nation – at a time when relations between the Western nations and China have become increasingly hostile and strenuous.
Citing sources familiar with the matter, Prime Minister Giorgia Meloni’s government was initially worried about growing influence of Sinochem on Pirelli, and now, with the proposed partnership renewal – the Chinese group will have the power to appoint more board members and potentially choose the future CEOs of Pirelli.
Rome on Friday said that it had levied prescriptions that were aimed at protecting “the autonomy of Pirelli”, and it also included a pact that “some” of the strategic decisions by the company’s board members must require approval by at least 80% of directors.
The administration also mentioned that it had accepted some proposals made by the Chinese shareholder in order to address its queries, and also specified regulations to protect the interests of cyber sensor technology that can be used into Pirelli tyres.
The government in its statement said, “The relevance of such a technology can be identified in a variety of sectors: industrial automation, machine to machine communication, machine learning, artificial intelligence, advanced manufacturing, critical sensor and actuator technologies, big data and analytics.”
Image Source: Sinochem Holdings Home
The tyre maker— Pirelli, which was founded in 1872, is now one of the Italy most storied companies. It’s deals in high and tires for luxury car makers like Ferrari, force and BMW as is the only tyre manufacturer for formula one cars.
Right now, Italy’s government abstained from putting stricter conditions on the Chinese shareholder such as blocking its voting powers in Pirelli. Nonetheless, if required, Meloni’s government will be forced to impose amendments in the shareholder pact of Sinochem and Camfin.
Previously, this year – the Chinese group confirmed its plans to continue as a long-term investor in the Italian tyre making company.
Pirelli is about to appoint a new board of directors at shareholders meeting which will be held on July 31, and the current deputy CEO Giorgio Bruno is about to replace Tronchetti Provera to become the new chief executive of the company while Provera will hold his position as an executive chairman. Tronchetti Provera headed the company since 1992.
The measure has been taken by the Italian administration to restrict Sinochem’s hold on the tyre manufacturing company just before another major decision whether to retrieve Rome’s alliance with Beijing on the Belt and Road Initiative (BRI).
In 2019, Italy became the first and until now the only G7 nation to partner in China’s most ambitious BRI initiative, which according to critics, could enable Beijing to access control of sensitive technologies and important infrastructure.
The BRI looks forward to rebuild the old silk Road which connected China with Europe and has large infrastructure spending.
