BEIJING (Reuters) - The chairman of China National Chemical Corp (ChemChina) said on Sunday he hopes to re-list Italy’s Pirelli PECI.MI on the Italian stock exchange after his firm agreed earlier this month to acquire the world’s fifth-largest tire maker.
Ren Jianxin also warned that a counterbid for Pirelli would hurt the Italian firm’s investors and long-term strategy. ChemChina has agreed to become majority owner of Pirelli as part of a multi-layered 7.3 billion euro ($8 billion) deal, putting one of Italy’s storied manufacturing names in Chinese hands.
“We were worried that due to cheap liquidity, there might be blind competition,” Ren told reporters. “But a counterbid will hurt Pirelli investors and also its long-term strategy.”
On Thursday, Pirelli CEO Marco Tronchetti Provera told Reuters his firm is not talking to others about a possible counterbid.
Ren is betting the Pirelli acquisition will accelerate the transformation of state-owned ChemChina’s tire and rubber business. The deal will give the Beijing-based conglomerate access to technology to make premium tyres which can be sold at higher margins, and give the Italian firm a boost in China, the world’s biggest autos market.
Pirelli’s industrial tire operations will be merged with ChemChina’s Aeolus Tyre Co 600469.SS unit, making the combined firm the world’s fourth or fifth biggest industrial tire maker, Ren said.
The deal also will allow the combined firm to expand its presence in China and Asia. Ren characterized the acquisition as “revolutionary” for his company’s rubber and tire business.
He described his partnership with Tronchetti as a “very beautiful marriage” and said the Italian will be CEO for the next five years, after which Tronchetti would pick his successor. In Thursday’s interview, Tronchetti said he may stand down as CEO before five years if the right successor could be found. He also said Pirelli may be re-listed within four years, though not necessarily in Milan.
Ren dismissed the likelihood that Pirelli workers would be fired after ChemChina takes over. The deal, he said, is about expanding scale and increasing market share. “That means we will need more people to join; there will not be redundancies,” he said, adding he plans to invite Pirelli’s union members to visit China.
The deal, agreed with Pirelli’s top shareholders last week, is the latest in a series of takeovers in Italy by cash-rich Chinese buyers taking advantage of a weak euro EUR= just as Europe is slowly emerging from economic stagnation.
Ren said he does not want to see the Pirelli brand hurt by ChemChina’s investment.
The bid will be launched by a vehicle controlled by the Chinese group and part-owned by Camfin investors, who include Tronchetti, Italian banks UniCredit CRDI.MI and Intesa Sanpaolo ISP.MI, and Russia’s Rosneft ROSN.MM.
ChemChina, which operates six different business segments, had total revenue of about 300 billion yuan ($48.27 billion) in 2014, Ren said.
($1 = 6.2145 Chinese yuan renminbi)
Writing by Sui-Lee Wee; Editing by Michael Perry and Ian Geoghegan