Italy Moves to Protect Tire Company Pirelli by Blocking Chinese Management Intervention

"Preventing Further Transfer of Management Rights"

The Italian government has stepped in to prevent the management rights of its domestic tire company Pirelli from further transferring to a Chinese company.

According to the British BBC on the 19th (local time), Pirelli announced in a statement to investors the day before that the Italian government had made this decision. Under this decision, the Italian government stipulated that only Pirelli's holding company, Campin, can nominate candidates for Pirelli's Chief Executive Officer (CEO). Even minor changes in Pirelli's governance structure will be subject to government review.

Pirelli

This measure was triggered when the Chinese state-owned oil company Sinochem announced in March its intention to renew the existing shareholder agreement with Campin. In 2015, Sinochem acquired shares in Pirelli, becoming the largest shareholder. Currently, Sinochem holds 37% of the shares, while Campin holds 14%.

Marco Tronchetti Provera, CEO of Pirelli, said in an interview with the Wall Street Journal (WSJ) on the 6th, "Sinochem is trying to intervene in management by breaking the share acquisition agreement made in 2015." He added that he had informed the Italian government about this situation.

In response, Giorgia Meloni, the far-right Prime Minister of Italy, reportedly conducted a thorough review of this decision under the 'Golden Power' regulation, which protects domestic companies from foreign investments, according to major foreign media.

Pirelli, founded in 1872 in Milan, Italy, is the world's sixth-largest tire manufacturer with a history of 151 years.

Furthermore, this decision is interpreted as the Meloni government taking a tough stance against China. Reports last month suggested that the Meloni government is likely to withdraw from China's Belt and Road Initiative (the overland and maritime Silk Road connecting China, Central Asia, and Europe) within this year.

In 2019, Italy was the only member of the Group of Seven (G7) to participate in China's Belt and Road Initiative.