Italy looking to limit Sinochem’s influence over Pirelli

According to “people familiar with the matter,” Italian officials are speaking with Pirelli SpA investors about the company’s ownership structure in an attempt to limit the influence of Chinese state-owned enterprise Sinochem. Reporting this development, Bloomberg shares that the parties are discussing a range of options, including limiting the sharing of information about “sensitive and strategic technology” with Sinochem-appointed board members. Limits may also be placed upon these board members’ voting rights, the unnamed sources told Bloomberg. Talks are said to be ongoing, and neither Pirelli nor Sinochem have spoken on the matter so far.

Bloomberg comments that the current talks “reflect a dilemma in Europe about doing business with Beijing” against the backdrop of strained relations between the United States and China. It observes that the situation is a “particularly delicate” one for Italian Prime Minister Giorgia Meloni, as Italy is the only Group of Seven country to have signed a memorandum of understanding with China on its Belt and Road initiative, an arrangement that Italy must actively opt out of when not wishing for it to be automatically extended in 2024.

Quoting its unnamed sources, Bloomberg further reports that Italy is contemplating “crafting measures” so that instead of targeting China directly, they affect a “broader array” of countries that are “not considered strategic partners.”

Golden Power

Pirelli recently informed the Italian government of plans to renew a shareholder pact between Sinochem and Camfin, the financial holding of Pirelli’s chief executive Marco Tronchetti Provera. Should the government wish to intervene, it will be able to draw upon a law bearing the English name “Golden Power” that can limit or stop foreign investments and corporate transactions involving strategic Italian assets. As Sinochem is Pirelli’s largest shareholder, the rules attached to Golden Power require the tyre maker to seek government approval regarding important business decisions.

Bloomberg notes that the options being discussed “would not alter the shareholding structure nor force Sinochem to sell,” but would “limit China’s ability to influence the company’s business.”