ChemChina seals deal to buy Italian tyremaker Pirelli for $7.7 bn

China National Chemical Corporation (ChemChina) yesterday struck a deal to buy Italian tyremaker Pirelli in a €7.1 billion ($7.7 billion) deal, the biggest deal so far carried out by the Chinese in Italy.

Under the deal, ChemChina's tyre making unit China National Tire & Rubber, will first buy a 26-per cent stake in Pirelli from Italian investment company Camfin S.p.A. for €15 per share and then launch a mandatory takeover bid for the remaining.

The total deal is valued at €7.1 billion excluding debt of nearly €1 billion.

Camfin is 50 per cent owned by Russian oil & gas giant Rosneft, and the rest by Pirelli chairman and CEO Marco Tronchetti Provera, Italian banks Intesa Sanpaolo and UniCredit.

ChemChina and Camfin said in a statement that the deal would allow Pirelli to double its volumes in the industrial tyres market from 6 million to 12 million.

''We are delighted with the opportunity to team up with Marco Tronchetti Provera and his team to continue to build together a world class organisation and market leader in the global tyre industry,'' said, Jianxin Ren, chairman of ChemChina.

Camfin said in a statement that Pirelli's less profitable truck and industrial tire business would be merged into ChemChina's listed unit AEOLUS, allowing it to double its output.

Rosneft is keen on selling the stake in the wake of recent western sanctions against Russia over Ukraine.

Milan-based Pirelli is the world's fifth-largest tyre manufacturer behind Bridgestone, Michelin, Continental, and Goodyear. It has 19 manufacturing sites worldwide and is present in over 160 countries.