The background – The Alliance unpublished BETWEEN CHINA AND RUSSIA but under Italian
Milan , March 23 2015 – 08:05
You have to pick up the threads of a story that began three years ago to find the point of starting the long road that led to the breakthrough. It all begins with a phone call. At the other end there is Ren Jianxin, the powerful head of China National Chemical Corporation. Asks Marco Tronchetti Provera a meeting in Milan. He wants to learn all about the world of Pirelli. The Chinese entrepreneur has a goal, but it reveals immediately. It will do so after visiting the Bicocca and Settimo Torinese, where there is the technological heart tire industry. Wants to buy. All Over. It is very determined. Jianxin is a self-made man, a native of the rural area of Dunhuang, which started to become a big washing teapots in industrial cleaning, and subsequently on behalf of the central government began to aggregate small chemical companies creating ChemChina. A Tronchetti tells his story, where it came from, the difficulties he had to overcome, showing a human side that the Chinese do not have the habit of revealing.
The stop in Yokohama
Tronchetti was already working on the future of the group to make it more solid, ensuring continuity and put sheltered from the mire of competitors and dismemberment that would eventually erase the brand and the history of Pirelli. The strategy had a final destination in Asia, a market with enormous potential in which the Milan group is already present, and they were in talks with the Korean Hankook and Yokohama. After visiting their factories the president decides, however, which is that the alliance with ChemChina to do. For a simple reason: it is not a competitor, has broad shoulders, a potentially huge market and the industrial point of view is the right partner to extract value from the assets of the segment “industrial” Pirelli, representing one third of the volumes and a quarter of the turnover, but to remain competitive have to increase size. The Chinese giant has a division, Aeolus Tyre, which produces tires for trucks and heavy vehicles, to which the group of Bicocca can offer new products, technology and a real strategy.
ChemChina mean projecting Aoelus at the top of the world market, Pirelli entrusting to the growth path. And ‘the hub around which Tronchetti Jianxin and have built the alliance. Aeolus from 28th world player of the segment will end 4th or 5th. And Pirelli will become the largest shareholder.
Clash with Malacalza
There is also another why Tronchetti decided to ally with ChemChina. So far no merger of competitors has created value in the tire sector. Goodyear, for example, tried to get along with Sumitomo destroying value and today is struggling with divorce proceedings. The exact opposite of what he wants Tronchetti for Pirelli, which in the meantime has entered as an ally Malacalza family, sharing the project.
The Genoese put though sideways opening a dispute with the leaders of the Milan group. At that stage the turbulent group of Beijing will wait confident. Malcalza to happen Hourglass and family Rovati and these will assist the entry of Rosneft. It is at this stage that ChemChina back into the game.
Travel in Washington
The Russians, as well as Jianxin, know the long-term project and share it. Also the partnership with the Russians, however, will eventually create some problems. That this time you can not solve with a negotiation. The problem is called Ukraine. Rosneft and its president Igor Sechin, who is also on the board of Pirelli, are hit by international sanctions against Russia. They said that was Tronchetti to handle the situation by flying to Washington to explain to the State Department that this was an industrial alliance with Rosneft and that makes Pirelli tires and just. Anything that has to do with security or defense. Rosneft remains on board as a partner and ally.
In October the close
Rosneft also remains in the reorganization with ChemChina, alongside Italian shareholders. It is not just a detail. Russia-China alliance in a company under Italian is unique. Tronchetti has managed to create the conditions, without changing the structure and the guidance of the Pirelli. To find the formula was the lawyer Michele Carpinelli and legal study Chiomenti, who along with a small team of Lazard coordinated by Marco Samaja, and men of Mtp spa, safe Tronchetti, from October began working in the maximum reserve to finishing the dossier.
Meeting with Prime Minister
Another person was aware of the close with ChemChina: Prime Minister Matteo Renzi, who had been informed of the operation Neglin last days. The policy has not interfered. The controversies on Italian, on the arrival of the Chinese, the employment guarantees, that have framed the final rush are part of the game. A little ‘perhaps Tronchetti if expected, although Pirelli will not change anything. Compared to the old agreements with Rosneft, those signed yesterday will be even more stringent, in addition to defining a new equilibrium in which the Italian partners will weigh more than the Russians. For the first time the syndicate will become part of the Statute of Pirelli, which will be modified by introducing a requirement of 90% of votes in favor in the assembly to move the headquarters or sell the technology. An innovation that is a guarantee of long-term stability, integrity and the Italian group, of which the current management will retain operational leadership, headed Tronchetti who was also entrusted with the management of the entire reorganization and to decide when to return Pirelli on the Stock Exchange. In September will start the tender offer to withdraw from Pirelli list. At launch it will be a corporate vehicle of which ChemChina has 65% and Tronchetti with Rosneft and the Italian partners 35%. But the weights may change. It depends on the level of membership takeover bid, in which the members participate by making Italian capital, having sold though the same company 26% owned by Pirelli Camfin. It will take three years to complete the maneuver that Tronchetti will be the great director. The path is fully defined. Even the drop point. After the reorganization Pirelli will return in the stock market, in the belly with the valuable part of the premium tires, valued by the market at higher multiples, and the majority stake in the new reality “industrial” to be born from the aggregation with Aeolus.
March 23, 2015 | 08:05
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