With the new Golden Power decree on Pirelli, the Council of Ministers has radically redesigned the governance balance of the group, a measure that has not satisfied the Chinese shareholders in the slightest who have decided to threaten legal action. The provision in fact drastically limits the weight of the largest shareholder, China National Tire and Rubber Corp (CNRC), a subsidiary of Sinochem with 34.1% of the capital. These requirements will remain in force as long as Marco Polo International Italy, the vehicle through which the Chinese hold the stake, maintains a stake above 9.99%: an explicit signal that Palazzo Chigi wants to push Sinochem to reduce the stake below this threshold.
The Chinese reaction
Marco Polo International Italy reacted harshly, defining the measures as “discriminatory” and detrimental to the “legitimate rights and interests” of the Chinese shareholder “pursuant to Italian corporate law and Pirelli’s statute”, reserving “the right to take any necessary legal action.” The decree also provides that Pirelli itself must refuse any management initiative coming from subjects attributable to SASAC, including the sharing of data processed through the Cyber Tyre. If the requirements are respected, and if they are sufficient to satisfy the American authorities on connected vehicles, a question that is still open, Palazzo Chigi would in fact have started the countdown for the definitive exit of the Chinese from Bicocca.
The provision requires Marco Polo International Italy to present to the shareholders’ meeting a list for the renewal of the Board of Directors with a maximum of three candidates out of fifteen in total, of which two are independent. If elected, Chinese representatives will not be able to hold top positions such as president, vice president or CEO, nor chair board committees nor receive management delegations or executive powers.
The technological node: the Cyber Tire and the American market
At the center of the matter is the Cyber Tire technology, already classified as strategic by the Golden Power in 2023, which risks being excluded from the US market due to the American rules on connected vehicles, which prohibit software and hardware from companies with significant Chinese shareholders. In recent months the parties have explored various solutions without reaching an agreement. Sinochem had proposed a “self-freezing” of voting rights for three years through a trust, but the verification with the American administration had given a negative result. An alternative plan was followed based on the spin-off of the sensors into a new company 100% controlled by Pirelli, rejected by Camfin because it was “destructive of value.” Camfin had finally proposed the reduction of Sinochem from 34% to 10%, but the operation would have stalled on the price: the Chinese demanded a majority premium. With the failure of negotiations, government intervention cuts the knot unilaterally.
The history of friction between members
The tension between Sinochem and the Italian shareholders has roots in 2023, when ChemChina (original shareholder of Camfin, public but independent) was involved in the merger with Sinochem, an entity totally dependent on SASAC, the Chinese state agency that controls the Beijing government’s shareholdings. With the change of ownership, the first attempts to modify Pirelli’s governance emerged, which resulted in the first Golden Power intervention. Since then, China’s share has fallen from 46% to 34%, while Camfin has risen from 14% to 25% with the stated aim of reaching 29.9%, progressively eroding Sinochem’s control of the assembly and the board.
