The editor of the Financial Times, Roula Khalaf, curates her preferred articles in a weekly newsletter called the Editor’s Digest, available at no cost.
Pirelli’s board is urging Sinochem, the Italian tire manufacturer’s significant Chinese investor, to reduce its stake amid concerns that the Trump administration’s stringent stance on Beijing’s ownership of American assets could hinder Pirelli’s expansion in the United States. Sources familiar with the matter reported that during a board meeting on Wednesday, Pirelli’s management plans to ask Sinochem to decrease its 37% stake to below Camfin’s 26.4% share.
This move reflects the remarkable measures companies are undertaking to align with U.S. President Donald Trump’s policies. Recently, Hyundai announced a substantial investment in the U.S. amounting to $21 billion, which Trump hailed as proof of the effectiveness of his trade policies aimed at boosting local manufacturing.
One suggested approach for Sinochem is to lower its stake to under 25% through a share buyback, with some shares immediately resold on the market, according to people with insight into the plans. It remains uncertain if Sinochem, represented at the meeting by its president Jiao Jian, who also chairs Pirelli, will agree to the proposal. Discussions prior to the board meeting concluded without an agreement, insiders noted.
Both Pirelli and Sinochem have refrained from commenting on the situation. Although Pirelli has a factory in Georgia, most tires for the North American market are produced in Mexico and South America. Amidst Trump’s trade policies and potential tariffs on imported cars, the company aims to enhance its presence in the U.S., contributing a quarter of its global profits.
However, Pirelli’s expansion plans have encountered resistance in recent discussions in the U.S., reportedly due to the involvement of a Chinese state-owned company as its largest shareholder. Pirelli, the supplier of tires for Formula 1 cars, also possesses technology capable of linking tire sensor data to vehicle command systems. This technology is in high demand in the U.S., but Pirelli fears exclusion from the market due to Sinochem’s stake in the company.
In January, the U.S. implemented a ban on Chinese automated driving systems and related hardware and software, impacting products like Bluetooth, WiFi, and satellite technologies.
State-owned ChemChina, which merged with Sinochem, acquired a majority stake in Pirelli through a $7.7 billion deal in 2015. At the time, the Chinese investor agreed not to interfere with the Italian company’s day-to-day management, strategy, or appointments.
This situation arises nearly two years after the Italian government, led by Prime Minister Giorgia Meloni, imposed restrictions on Sinochem’s shareholder rights within Pirelli under Italy’s “golden power” foreign investment screening mechanism. This move succeeded frequent disagreements between Pirelli’s Italian management, involving former chief executive Marco Tronchetti Provera, and Sinochem, as the latter attempted to exert increased control over the historic Italian industrial entity amid rising geopolitical tensions.
In 2023, Sinochem sought to modify a shareholder agreement, intending to remove Camfin’s indefinite right to appoint Pirelli’s chief executive, igniting further disputes with Pirelli’s management.