The chairman of China National Chemical Corp (ChemChina) recently commented on the sidelines of his company’s bid to acquire the fifth-biggest tyre maker in the world, Pirelli, claiming he would envision a re-listing for the latter after the acquisition completes.
Ren Jianxin, ChemChina’s chairman, also offered his views on the possibility of a counter bid for Pirelli, claiming that such offer would impact the Italian firm’s investors and long-term strategy. Earlier this month ChemChina announced a deal to bid for majority ownership of Pirelli in a multi-layered 7.3 billion euro ($8 billion) agreement – with one of the most important Italian manufacturing firms ready to become a China household name. “We were worried that due to cheap liquidity, there might be blind competition,” said Ren. “But a counterbid will hurt Pirelli investors and also its long-term strategy.” Additionally, Pirelli chief executive officer, Marco Tronchetti Provera, said for Reuters the company was not seeking to engage talks for a possible competing offer.
The ChemChina mulls the acquisition as part of its strategy to revamp state-owned ChemChina into a leader on the tyre and rubber market. The Beijing-based conglomerate would gain access to Pirelli’s technology to build premium tires – sold at higher earnings margins – and also lift the latter’s position in China, the largest auto market in the world. The Italian company’s industrial tyre business will be merged with ChemChina’s Aeolus Tyre Co division, making the new unit the world’s fourth-biggest tyre maker in the process.