by Brad Anderson
- US rules target Chinese tech in vehicles starting this March.
- Pirelli’s expansion has stalled under Chinese majority ownership.
- Italy may freeze China’s voting rights at Pirelli if talks fail.
The Italian government may soon take a more active role in Pirelli’s planned expansion into the US market, with a potential move to freeze the voting rights of Sinochem, the Chinese state-owned company that currently holds a 34 percent stake in the Italian tire manufacturer.
For several months, Pirelli and its Italian partner Camfin have argued that Sinochem’s position as the primary shareholder has complicated efforts to grow the business in America, especially as Washington tightens restrictions on Chinese technology in the automotive sector.
Read: US Threatens Action Over Pirelli Tech Hidden In Your Car’s Tires
According to Reuters, Italy’s “golden power” law gives the government authority to limit shareholder rights in companies considered of strategic national importance. Pirelli falls under that category, and Sinochem, aware of the tension, is reportedly open to exiting. The company has brought in BNP Paribas to advise on a potential sale of its stake.
Industry Minister Adolfo Urso noted that discussions are ongoing between Pirelli’s Italian and Chinese shareholders. There’s also speculation that a deal could be struck that would see Sinochem reduce its holdings rather than exit entirely.
Countdown to January
Sinochem’s large stake in Pirelli has weighed on the tire manufacturer for several years, and there’s no increased pressure to find a resolution. In March, new US rules will go into effect that will restrict the use of Chinese technology in locally sold vehicles. That could spell bad news for Pirelli, given that such a large portion of the company is owned by a Chinese firm.
The Financial Times reports that if no agreement is reached between Pirelli and Sinochem by January, the Italian government would consider intervening. That intervention could involve suspending Sinochem’s voting rights to clear the way for Pirelli’s US strategy.
Sinochem originally purchased Pirelli in 2015 before listing the carmaker in Milan two years later. It had previously attempted to strengthen its grip on the tire manufacturer, prompting an intervention by the Italian government in 2023.