Italian tyre manufacturer Pirelli has announced that its Chinese investors, Sinochem and Silk Road Fund, will not be extending their partnership agreement to collaborate on certain company matters.
Sinochem and Silk Road Fund collectively hold stakes of 37% and 9%, respectively, in Pirelli. This collaboration was formalized through a shareholder agreement signed in 2020. As part of this agreement, Silk Road Fund had committed to align its votes with Sinochem’s at Pirelli shareholder meetings, specifically on selected issues, for its 5% stake within the total 9% held.
However, this shareholder agreement has now come to an end as it reached its expiry date on September 29. Pirelli made this announcement but did not provide specific reasons for the decision.
Sinochem’s Separate Governance Agreement
It’s important to note that state-owned Sinochem has a distinct governance arrangement with another investor, Camfin, which is the vehicle of Marco Tronchetti Provera. Provera, an Italian businessman, has been at the helm of Pirelli since 1992 and currently holds the position of executive vice chairman.
Italian Government’s Involvement
Earlier this year, the Italian government utilized “golden power” legislation, which safeguards critical national assets, to impose regulations on the proposed renewal of the governance pact between Sinochem and Camfin. This intervention by the government has enhanced Camfin’s influence over Pirelli, despite its ownership stake in the company being only 14.1%. Pirelli serves as the official tyre supplier for Formula One motor racing.
This development signifies a shift in the dynamics of Pirelli’s shareholder relationships and corporate governance, with implications for the company’s future direction and decision-making processes.