ROME, April 10 (Reuters) - Italy imposed new curbs on China's Sinochem to try to end a governance spat in tyre maker Pirelli, people familiar with the matter told Reuters. Pirelli's two largest
Italy imposes curbs on China's Sinochem to avoid US restrictions on Pirelli
By Giuseppe Fonte and Giulio Piovaccari
Italy's Strategic Moves to Limit Sinochem's Influence in Pirelli
Background of the Governance Dispute
ROME, April 11 (Reuters) - Italy has imposed several curbs on China's Sinochem to try to resolve a governance spat in Pirelli, the tyre maker said on Saturday, confirming an earlier Reuters report.
The curbs will remain in force as long as Sinochem retains a stake in Pirelli above 9.99%, the company said in a statement, in a sign that Rome wants Sinochem to cut its 34% shareholding.
Shareholding Structure and Key Stakeholders
Beijing-controlled Sinochem is Pirelli's largest shareholder, while Camfin, the vehicle of Italian businessman Marco Tronchetti Provera, holds around 26%, with plans to increase it to up to 29.9%.
Concerns Over US Expansion and Technology Restrictions
Both Pirelli and Camfin have called for restrictions on Sinochem, saying that its ownership position complicates Pirelli's expansion plans in the United States, as Washington tightens restrictions on Chinese technology in the automotive sector.
The U.S. is a key market for Pirelli's premium tyre business.
Government Intervention and Golden Power Legislation
Prime Minister Giorgia Meloni's government imposed the curbs this week using golden power legislation aimed at shielding strategic assets.
Board Composition and Voting Rights
Italy ruled that Sinochem was entitled to submit a list of candidates for Pirelli's board renewal comprising a maximum of three members, two of whom must be independent.
The company's board currently has 15 members, eight of whom come from its Chinese investor.
Restrictions on Corporate Offices
Sinochem board members will not be allowed to hold top corporate offices such as chairman or chief executive, Pirelli said, outlining the prescriptions.
Pirelli's shareholder meeting is due to renew the board in June.
Information Sharing and Influence Limitations
The government also reiterated that Sinochem must avoid exerting any influence over the group, under requirements first imposed in 2023.
Pirelli will not have to share sensitive information with its Chinese investor, the tyre maker's statement said.
Future Prospects and Shareholder Agreements
In January, Camfin had said it would not renew its shareholder pact nL6N3YF0OO with Sinochem, paving the way for a new intervention by the Italian government.
Rome would have preferred the companies to reach an agreement, but in the absence of any deal, it intervened through golden powers.
Reuters reported last year nL8N3AQ4Z3 that Sinochem was ready to assess offers with a market premium from potential bidders for all of part of its Pirelli stake.
New Prescriptions on Share Transfers
One of the new prescriptions requires Sinochem to notify the government of any share transfer, which must not be made in favour of entities affiliated with or controlled by the Chinese government.
(Reporting by Giuseppe Fonte in Rome and Giulio Piovaccari in Milan, editing by Gavin Jones, Rod Nickel and Jane Merriman)
