Italy set to limit shareholder rights of Chinese owner in Pirelli

Italy has approved measures to limit Chinese chemical group Sinochem’s shareholder rights in Milan-listed tiremaker Pirelli and set out a wide range of areas the government considers of national security importance.

The decision is a rare intervention in the eight-year-old Chinese investment, which until now was not considered a strategic national asset. In 2015, the previous Chinese state-owned chemicals conglomerate bought a majority stake in Pirelli, considered a crown jewel of Italian industry, for $7.7bn.

Prime Minister Giorgia Meloni’s office said in a statement on Friday that the latest measures passed under the country’s “golden power” foreign investment screening mechanism were aimed at “creating a network of measures to safeguard the independence of Pirelli and its management”.

The FT revealed this month that Pirelli chief executive Marco Tronchetti Provera had lobbied Rome to intervene in the company’s shareholding arrangement, warning that the Chinese government was taking more control of Pirelli’s business and governance decisions .

Tronchetti Provera, who holds a minority stake in Pirelli, has been battling with his Chinese partners over day-to-day management for the past few years. He has unsuccessfully tried to persuade them to sell part of their stake. Differences have also emerged within the company over his salary, which was pegged at €20.5mn in 2022.

Meloni’s office said Rome’s restrictions, which include limits on access to and sharing of information between Pirelli and Sinochem and a four-fifths majority vote for certain “strategic” board decisions, are intended to protect “strategically relevant information and information about the company.” “information” was to be protected.

The decision comes as the Italian government attempts the difficult balance of aligning itself more closely with the EU and the US on foreign policy and re-evaluating its relationship with China, while at the same time not antagonizing Beijing. Does

Meloni’s government is also considering pulling out of Beijing’s flagship foreign investment project, the Belt and Road Initiative. Italy was the only European country to join the BRI in 2019.

Last month, the leaders of the US, EU and Japan united behind the idea of ​​”de-risking” China from “the need to protect certain advanced technologies that are used to threaten our national security”. May go”.

Since 2019 the scope of what counts as assets of national security importance has been broadened in Italy and the EU, leading to an increase in applications filed under Italy’s screening mechanism from 8 in 2014 to 496 in 2021.

Meloni’s office said that a specific technology that allows for the collection of geolocation and drivers’ information via a microchip installed on the tires was critical and of national strategic importance.

“The misuse of this type of technology can pose a range of risks to customers and national security,” the office said.