The latest bomb purchase in the tire making business concerns Italian tyre maker Pirelli, acquired by the China National Chemical Corp, and the company has announced that no special dividend to accompany the deal is being planned.
The news comes courtesy of a report from Reuters, with the media provider quoting two unnamed persons that have direct knowledge of the tyre maker’s strategy. The sources claim no special dividend will be offered to shareholders as part of the buyout process. ChemChina will purchase the globe’s fifth-biggest tyre producer in a deal worth 7.3 billion-euro ($8 billion), announced after a shareholder agreement reached on Sunday – taking the 143-year-old Italian business into Chinese property. Analysts believe a special dividend could have been used as a “sweetener” to mitigate any opposition from current shareholders – ChemChina and Pirelli’s largest investors will introduce a mandatory takeover bid on the company in a drive to de-list it as part of the buyout process.
Currently the purchase price has been set to 15 euros a share, but the company’s stock is already past that figure – hovering at around 15.5 euros – bringing the speculation that Chem China might need to bring a larger amount to the table. Also, media reports have also brought forth the possibility of other investors launching a counter bid. Analysts believe that Pirelli will offer its traditional dividend on its 2014 results ahead of the launch of the purchase offer, estimated at around 0.36-0.44 euros. The sources said Pirelli has no intention to offer anything else above that figure, with the dividend’s level set by the company’s board on March 31.