Sinochem gets in touch with Pirelli’s leadership. On Wednesday, the Italian tyre maker’s executive vice chairman Marco Tronchetti Provera met with Jiao Jian, the company’s chairman as well as director and president of Sinochem Holdings, the Chinese State titan holding a 37% stake in Pirelli.
- This meeting, reported by Il Sole 24 Ore, is the first face-to-face contact between the two – who represent the parties of Pirelli’s main shareholders’ agreement – since the government intervention in June that used its special powers to rewrite the agreement and heavily restrict the Chinese partner.
Things look calm… The paper’s sources said the meeting’s climate was cordial and institutional. It took place on the eve of Pirelli’s board meeting, which happened on Thursday and redistributed operational powers to the new management, represented by Messrs Jiao and Tronchetti Provera as well as CEO Andrea Casaluci. As required by the government’s intervention, they have been complemented by a newly-nominated general manager, Francesco Tanzi.
- Now, writes Il Sole 24 Ore, it’s a matter of understanding how the new Italo-Chinese co-management will develop – and if and how Sinochem’s strategy will change. Rumours about the company exiting Pirelli because of the Rome-directed governance changes have made the rounds these past months.
… but someone’s definitely unhappy. Under the new rules, designed to limit Sinochem’s control over the company, the Italian shareholders are back at choosing four out of twelve board members; Mr Tronchetti Provera’s company Camfin gets to decide the CEO; the new general manager must implement the business plan and oversee ordinary management; there’s stronger oversight of the matters deemed fundamental to the company; and a four-fifths board majority is required to reject a proposal by the company head.
- In essence, as Il Sole 24 ore notes, the Chinese “are prevented from exercising coordination and control functions, but also from talking to and interacting with the management.”
Is a divorce looming? An indication could come on September 29, when Sinochem will have to decide the future of the pact it signed with Silk Road Fund (controlled by the government in Beijing), which holds 9% of Pirelli. This deal aligns Sinochem and half of Silk Road’s voting power, bringing the total Chinese control of the company to 42%.
- It’s also up for renewal, and if the Chinese partners were to leave it expire, it could be the beginning of a “free-for-all” – signalling Sinochem’s desire to leave Silk Road more flexibility within Pirelli and possibly its will to resize its share, or even get out completely.
- Intermonte, the same consultancy that predicted the government’s intervention, believes Sinochem will surely consider the latter options.
