Pirelli shareholders have disagreements over the management of the company
Chinese and Italian shareholders of Pirelli have disagreements over the management of the company, which may lead to the impossibility of approving the financial results of the tire manufacturer for 2024 at the board meeting scheduled for March 26, Reuters reports citing its sources.
The largest shareholder of Pirelli, with a 37% stake, is the Chinese state-owned corporation Sinochem, which could harm the company's business in the US, as Washington tightens measures against the use of Chinese technologies in the automotive industry.
Agency sources say that discussions are ongoing on how to further reduce Sinochem's influence on Pirelli's management after the Italian government limited the powers of the Chinese investor in 2023 to protect the company's autonomy. It is possible that measures will be taken to reduce Sinochem's stake in Pirelli, and another option is that Rome will deprive the Chinese side of the right to vote at shareholder meetings.
This year, the US approved new rules that prohibit the use of software and equipment from Chinese companies in "smart" cars that enter American roads, due to the possibility of collecting and transmitting data. The ban on software and equipment will apply to cars of the 2027 and 2029 model years, respectively. Meanwhile, Pirelli produces "smart" Cyber Tyre tires that can also collect and transmit information in real-time.
North America accounts for around 25% of Pirelli's revenue, and the local market is served mainly through tires manufactured in Mexico, South America, and Europe, as well as, to a lesser extent, with the help of products from the plant in Georgia.
The second-largest investor in Pirelli is Camfin Marco Tronchetti Provera, who headed the tire manufacturer from 1992 and is now the executive vice-chairman of the board.
In 2023, Rome, in accordance with the so-called "golden power" principle, created to protect assets considered strategically important for the country, established new management rules for Pirelli, in particular, giving Italian shareholders the right to appoint the CEO and veto key decisions of the board of directors controlled by the Chinese investor.
After the Italian government limited the influence of Chinese shareholders, Pirelli launched an internal procedure for a formal assessment of Sinochem's control. It is expected that a final decision on this issue will be made at the board meeting on Wednesday, and sources report that Pirelli is inclined to state that Sinochem no longer controls the company. However, without an agreement on management issues, members of the board of directors representing Sinochem may vote against approving Pirelli's 2024 activity report, which was published last month.
During 2024, Camfin increased its stake in Pirelli and now owns a 26.4% stake, planning to increase it to 29.9%, Reuters adds.
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