A Pirelli tire (Photo : REUTERS)
China National Chemical Corp. will buy a controlling stake in Pirelli in a 5.6-billion-euro (47 billion yuan) deal, placing one of the symbols of Italy's manufacturing industry in Chinese hands.
The deal also allows state-owned ChemChina access to technology to make premium tires.
In turn, the 143-year-old Pirelli, which equips cars in Formula One racing, will be better able to compete against rivals such as Continental AG and Michelin in Asia.
The deal is the latest takeover of Italy's industrial icons, that include those in sectors from fashion to food to engineering to energy, by Chinese investors taking advantage of a weak euro.
The Chinese have also acquired stakes in turbine maker Ansaldo, power grid firms Terna and Snam, and luxury yacht maker Ferretti.
The Pirelli buyout is also one of the biggest European acquisitions by a Chinese company.
ChemChina will first buy the 26.2 percent that Camfin, an Italian holding company, owns in Pirelli, and then launch a mandatory takeover bid for the rest.
The offer will be launched at 15 euros per share, valuing the group at 7.1 billion euros, excluding net debt of almost 1 billion euros at the end of 2014.
Shares in Pirelli hit a 25-year high last week, rising 5 percent above Monday's offer price on expectations of a dividend payout before the deal was completed.
The deal has the potential to create a global leader with a market share of 10 percent, according to Swiss bank UBS.
Pirelli's truck and industrial tire business would be folded into ChemChina's listed unit AEOLUS, allowing it to double its output.
The new Chinese owners will appoint a new chairman while Tronchetti Provera will remain chief executive.
