Italy has restricted top Chinese shareholder Sinochem’s rights in decision-making at tyre maker Pirelli, including its ability to choose the company’s CEO, a source familiar with the matter said.
The move by Rome’s right-wing administration aims to curb Chinese influence on one of Italy’s most storied companies, whose data-collecting technology in tyres, it says, is key to national security.
Sinochem is Pirelli’s main shareholder with a 37% stake, and has been invested in the company since 2015.
Rome’s move came after Sinochem notified the Italian government in March of plans to renew and update an existing shareholder pact with fellow investor Camfin, the vehicle of Pirelli’s CEO Marco Tronchetti Provera.
The revised pact said Provera would lose from 2026 powers he currently enjoys to designate the group’s CEO, leaving that task to Pirelli’s Chinese-controlled board. It also gave Sinochem an extra director in Pirelli’s 15-strong board and left three to Camfin.
Also, were the Sinochem-Camfin agreement not renewed in three years, Sinochem would theoretically be free to establish an even stronger majority of board members and increase the Chinese element in top ranks.
That led Italian Prime Minister Giorgia Meloni’s administration to scrutinise the pact under “Golden Power” rules that aim to protect assets deemed strategic for the country.
The Meloni government ruled that only Camfin could indicate CEO candidates for Pirelli, the source said.
It also said Sinochem should pick no more than eight members of Pirelli’s board, leaving four to Camfin.
“Some” strategic decisions by Pirelli’s board would also require approval from at least 80% of its directors, the Meloni Administration said on Friday.
‘Increasing’ Chinese hold
According to a Financial Times report, China’s Xi Jinping government had, since last year, moved to take greater control of Pirelli’s decision-making and management.
That included Chinese oversight of all Pirelli meetings and events involving foreign officials and diplomats, the report said. Members of the Chinese Communist Party (CCP), within state-backed Sinochem, also directed Pirelli to follow party “leadership” in “every aspect of company governance” and enforce “Xi Jinping’s three-year action plan to accelerate the modern Chinese business system within companies controlled by Sinochem”.
Pirelli boss Provera also faced disputes with Sinochem over the tyre-maker’s daily operations, the report added, leading Provera to warn Rome against the increasing hold of the Chinese government on the company.
National security concerns
Rome has said its move to shield the autonomy of the tyre-maker and its management is aimed to protect Pirelli’s sensitive tyre technology that uses microchips to collect data ranging from tyre usage to drivers’ information and geolocations.
“The relevance of such a technology can be identified in a variety of sectors: industrial automation, machine-to-machine communication, machine learning, advanced manufacturing, artificial intelligence, critical sensor and actuator technologies, Big Data and Analytics,” the government said.
“The misuse of such technology can cause a variety of risks for customers and national security,” the Meloni office told the FT.
Pirelli specialises in high-end tyres for premium carmakers like Ferrari, Porsche and BMW and is the sole supplier for Formula One cars.
Earlier this year, Sinochem had said that Pirelli represented a strategic and long-term holding, rejecting reports that it was considering selling its stake in the tyre-maker.
Sinochem was determined to protect Pirelli’s Italian character, which it considers an indispensable asset for the company’s future, a source close to the Chinese group had said.
- Reuters, with additional inputs from Vishakha Saxena