Pirelli acquires controlling stake in Russian JV
Pirelli will gain a controlling share of the Kirov and Voronezh tyre factories in Russia by increasing its stake in the joint venture it operates with Russian corporation Rostec and financial group GHP. The tyre maker will repurchase from GHP 15 per cent of shares from the package that used to belong to Fleming Family & Partners, thus increasing its share to 65 per cent.
Pirelli’s first-half results, published on 5 August 2013, show the tyre maker exercised its earn-in option to enlarge its shareholding in OOO Pirelli Tyre Russia. As a result, GHPs stake will go down from current 25 per cent minus one share to approximately ten per cent. Rostec says it share will stay the same “for a while” at 25 per cent plus one share.
Pirelli Tyre Russia’s Kirov and Voronezh plants are assets from bankrupt holding company Amtel, which were managed by Sibur before their sale in late 2011 and early 2012. Sibur sold these assets to the Russian-Italian joint venture for 222 million euros, and based on these figures, Pirelli must pay GHP 33.3 million euros for the 15 per cent share package. The joint venture partners also need to invest – in proportion to their respective shareholdings – a further 200 million euros in order to upgrade the plants and improve capacities. Pirelli will be required to reimburse GHP all costs that this financial group has already incurred in connection with this. By 2014, total production capacity of Pirelli Tyre Russia should be 11 million tyres per annum.
According to Pirelli’s first-half report, its revenue from the operation between 1 January and 30 June came to 135.5 million euros, eight per cent more than in the first half of 2012 and a figure that accounts for four per cent of the company’s global turnover.
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