Acquisition

How Much Do You Think Pirelli is Worth?

Pirelli falls into Chinese hands for serious sum of cash.

Pirelli, the world’s fifth largest tire manufacturer, is to be sold to state-owned chemical conglomerate ChemChina, with a deal expected to be concluded this summer. According to Autmotive News Europe, ChemChina will initiate the takeover by acquiring a 26.2-percent share in the Italian tire maker. A public tender offer for the remaining shares will follow. The deal is worth 7.1 billion euros in total, or around $7.7 billion, and will give the Chinese firm access to premium tire technology.

Pirelli currently supply tires for Formula One race cars, and the new deal will give them a boost in the Chinese market, enabling it to better compete against bigger rivals Michelin and Continental who are both seeking growth in Asia. Chairman, and part-owner, Marco Tronchetti Provera, will remain CEO under the deal, while ChemChina will appoint a new chairman. Pirelli’s headquarters will remain in Italy for the foreseeable future. Taking advantage of a weak euro, the deal is the latest in a long list of Italian takeovers by cash-rich Chinese investors, with Italy remaining the second-biggest acquisition market in Europe for China and the fifth-largest worldwide.

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