Sinochem offers to settle Pirelli management dispute

Chinese conglomerate Sinochem, the largest shareholder of Pirelli, has stated that it has developed a "structured solution" to resolve the dispute over the management of the tire manufacturer with Italian Camfin.

Just a few days prior, Camfin announced that it would not extend its shareholder agreement with Sinochem, which, as Reuters notes, creates a new opportunity for the Italian government to intervene in the management of Pirelli through the "golden power" rule, designed to protect national interests in the corporate sector.

Camfin claims that since the main shareholder of the manufacturer is a Chinese company, this creates an obstacle to expanding its business in the US, as Washington tightens restrictions on the use of Chinese technology in the automotive industry. At the same time, Rome is reportedly seeking new ways to limit Sinochem's influence on Pirelli's activities, up to turning the Chinese conglomerate into a passive shareholder.

Sinochem points out that the proposed solution "is based on standard and widely used instruments in accordance with the best international practices" and was developed to address both issues related to Pirelli's corporate governance system and questions related to the requirements of US regulatory bodies, "if any".

The Chinese investor also expressed hope for a "neutral assessment of the proposal by other stakeholders in the spirit of true cooperation", without specifying the details of the proposal.

A Reuters source reports that the proposed solution involves converting part of Pirelli's assets into a separate structure to distance it from the Chinese investor.

Camfin stated that the solution proposed by Sinochem would harm Pirelli's business model and technological development and would still not help the company meet the requirements of American regulations. The Italian investor Pirelli also reported that it had put forward its own proposal and "remains open to discussing a solution".

The restrictions on the use of Chinese technology in the US apply to Pirelli's "smart" tires, which are capable of collecting and transmitting data in real-time.

State-owned conglomerate Sinochem owns 34.1% of Pirelli's shares, while Camfin's stake is 25.3%, which is planned to be increased to 29.9%. Camfin is controlled by Marco Tronchetti Provera, who headed Pirelli from 1992 to 2023 and currently serves as the company's executive vice chairman.