Business writers around the world are reporting Chinese manufacturing giant ChemChina is about to buy tiremaker Pirelli.
According to Reuters, the deal starts with ChemChina’s tiremaking arm (China National Tire & Rubber) buying a 26.2 per cent chunk in the company from a holding firm. After that, they’ll acquire a large chunk of the remainder, although their final stake is undetermined as yet. Russian oil company Rosneft is going to still retain some of their stake in Pirelli as well, and there may be other parties who retain some ownership. However, ChemChina is supposed to be the majority owner after the dust settles.
Overall, Pirelli will be valued at 7.1 billion Euros. The recent slide in the Euro’s value means that while Pirelli’s stock price has been rising lately, Chinese buyers are anxious to snatch it up while the price is right.
Pirelli is the world’s fifth-largest tiremaker right now, but after the deal, that might change. Its truck and industrial tire division is supposed to be absorbed by ChemChina after the deal, but Reuters says the buyer hopes to use their acquisition as an opportunity to challenge Continental, Michelin and other tiremakers in the Asian market.
For now, the buyers are assuring employees their jobs are safe, so we can assume tire production is going to remain unchanged for the most part – you don’t have to worry about Pirelli and Cheng Shin tires coming from the same plant in the near future.