Pirelli in talks with a number of bidders before ChemChina deal

Bridgestone/Pirelli counterbid rumours rebuffed

With coverage of ChemChina’s purchase of Pirelli waning, various newswires have been reporting market rumours that Bridgestone has been preparing a counterbid for Pirelli. However, in an interview with Reuters on 26 March, Pirelli CEO Marco Tronchetti Provera said that such a move would be “a disaster”. He supported ChemChina’s bid, on the other hand, saying it is: “good for the future of Pirelli and guarantees its global growth”.

However, Tronchetti did reveal that before striking the ChemChina deal, Pirelli also held in-depth discussions with “two other Asian, non-Chinese players” over a possible deal involving Pirelli’s truck-tyre business. The Pirelli CEO didn’t name these bidders, but did say they these talks failed because they didn’t offer the same synergies as the ChemChina deal.

As news of Pirelli’s sale was breaking companies including Hanzhou Zhongce, Hankook and Yokohama were linked to the deal. Tronchetti’s suggestion that the two other Asian suitors were not Chinese would seem to suggest that these two firms are likely candidates, although spokespeople from both firms took the “no comment” option.

Tronchetti Provera also confirmed reports that he had first been approached by ChemChina’s chairman Ren Jianxin three years ago. The two bosses reportedly visited each other’s plants, but put takeover talks on hold when they could not agree a deal. Talks were revived six months ago.

The fact that Tronchetti Provera has come out in support of the ChemChina, has revealed the history of the talks and favours the “very good” 15 euros per share price offered by ChemChina suggests this deal is very much a friendly takeover. Others may not be so friendly. Indeed, Tronchetti told Reuters that he called ChemChina boss Ren Jianxin the Saturday before the signing of the deal and warned him that “without a deal, Pirelli might fall prey to a suitor who would want to split up the firm”. Still, as friendly as the current deal may be, the continuing machinations of the rumour mill suggests this story is not yet over.