By Giulio Piovaccari
MILAN (Reuters) – Chinese and Italian shareholders in Pirelli are at odds over the group’s governance, two sources said, potentially leading to a failure to approve the tyremaker’s financial results for 2024 at a board meeting scheduled for Wednesday.
China’s state-owned Sinochem is the largest investor with a 37% stake in Pirelli, a factor which could hurt the group’s activities in the U.S. as Washington cracks down on Chinese technology in the automotive industry.
The sources said discussions are ongoing over how to further reduce Sinochem’s influence on the company, after the Italian government intervened in 2023 to curb the Chinese group’s powers and shield the autonomy of Pirelli management.
This could include convincing Sinochem to cut its stake, while alternative options could entail Rome removing Sinochem’s voting rights in Pirelli, one of the sources said.
Pirelli declined to comment on the reports, while representatives of Sinochem were not immediately available.
The U.S. this year finalised rules banning key software and hardware from Chinese-controlled companies in connected vehicles on American roads, with software prohibitions taking effect in the 2027 model year and those regarding hardware in 2029.
Some of the tyres Pirelli produces are fitted with a technology capable of collecting data during motion and transferring the information in real time to the vehicle.
The Italian tyremaker makes around 25% of its revenues on the North American market. It mostly serves its North American market through tyre output from its plants in Mexico, South America and Europe, and, for a minor share, from its plant in the U.S. state of Georgia.
Pirelli’s second largest investor is Camfim, the vehicle of businessman Marco Tronchetti Provera, who has led Pirelli since 1992 and is now its executive vice chairman.
Italy, which in 2023 acted under so-called ‘Golden Power’ regulation aimed at protecting assets deemed strategic for the country, had set rules on Pirelli governance, including giving local shareholders the power to appoint the group’s CEO and to veto strategic decisions by the Chinese-controlled board.
Following governance limitations decided by the Italian government, Pirelli had launched an internal process to formally assess the control by Sinochem.
A final decision on the matter is expected during Wednesday’s board meeting, with Pirelli leaning to formally state that Sinochem is no longer controlling the tyremaker, the sources said.
Without a wider agreement on governance, board members representing Sinochem could vote against signing off on Pirelli’s 2024 full-year result report, which it released last month.
Camfin has been increasing its stake in Pirelli throughout 2024 and now has a 26.4% holding, with plans to reach 29.9%.
(Reporting by Giulio Piovaccari; Editing by Keith Weir)
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