ChemChina buys Pirelli for £5.1bn

Chinese nationalised company, China National Chemical (ChemChina) is to buy Italian tyre maker Pirelli at  £5.1bn (€7.1bn).

The move is the latest in a string of takeovers in Italy by cash-rich Chinese buyers, including stakes in Power grid firms Terna and Snam, Turbine maker Ansaldo and luxury yacht maker Ferretti.

The takeover gives ChemChina access to technology to make premium tyres and gives Pirelli greater access to the Chinese market.

Milan-listed Pirelli shares hit a 25 year hig closing  2.56% higher at €15.62 on Monday.

ChemChina’s tyre making unit, China National Tire & Rubber, is to buy the 26.2% stake in Pirelli owned by Italian investment firm Camfin. It will then launch an offer for the remaining shares.

Camfin said the bid would be launched by a consortium controlled by ChemChina but also part-owned by Camfin investors, who include Pirelli boss Marco Tronchetti Provera, Italian banks UniCredit and Intesa Sanpaolo, and Russia’s Rosneft.

The offer will be launched at €15 per share, valuing the group at €7.1bn excluding net debt of almost €1bn.

Current Pirelli chief executive Tronchetti Provera, who started working for tyre maker in 1986 after marrying a member of the Italian family that founded the firm, will continue in his post.