Pirelli asserts independence from China's Sinochem as it seeks US expansion
[MILAN] Italy's Pirelli said on Monday (Apr 28) that the government's 'golden powers' in the company meant it was no longer controlled by China's Sinochem , in a move that might make it easier for the tyre maker to expand in the United States.
Pirelli's Chinese and Italian shareholders have been at odds over the group's governance, with the company and its second-largest investor Camfin saying Sinochem was posing a hurdle to ambitions to expand in the US, one of its key markets.
The Italian government intervened in 2023 to curb state-controlled Sinochem's influence in Pirelli and protect the autonomy of its management under so-called 'golden power' legislation for companies deemed of strategic importance.
Following that move, Pirelli's board said on Monday it had passed a resolution declaring that Sinochem no longer controlled the company. It described that as 'a first, but not decisive, step on the path to the necessary adjustment of company governance to regulatory constraints in the USA'.
'Management therefore reaffirmed it will continue its dialogue with the main shareholders to align Pirelli's governance with American regulations, particularly regarding connected vehicles, in the interests of the company and all its stakeholders,' it added.
Sinochem, which holds a 37 per cent stake in Pirelli, said it was firmly opposed to the board's decision, arguing the golden powers ruling did not envisage any clause stripping it of control.
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Sinochem did not elaborate on possible countermeasures, including whether it might contest the board's move in court.
Pirelli responded to Sinochem's statement saying it 'rejects its content and confirms the correctness of the analysis conducted by the management and approved by the Board of Directors'.
'Cyber tyres'
The US is cracking down on Chinese technology in the automotive industry, banning key software and hardware from Chinese-controlled companies in connected vehicles on US roads. Software prohibitions take effect in the 2027 model year, those on hardware in 2029.
Some of the tyres Pirelli makes, so called Cyber Tyres, are fitted with a technology to collect data during motion and transfer the information in real time to the vehicle.
Last month, Pirelli said it had put on hold plans to invest further in the US due to regulatory issues linked to having Sinochem as its largest investor.
Pirelli said nine out of 15 board members voted in favour of Monday's resolution. Chairman Jiao Jian and four other Chinese board members voted against. Another Chinese member abstained.
The resolution was backed by Camfin's four board directors, three board members representing institutional investors as well as two Italian directors appointed by Sinochem.
Pirelli shares closed down 0.5 per cent. REUTERS
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