Pirelli's Prospects in America Could Rely on Events This Month | Carscoops

      An ownership deadlock may lead to significant repercussions as Italy and China strive to address increasing tensions before the new trade regulations come into effect in March.

      The US regulations will target Chinese technology in vehicles beginning this March.

      Pirelli's growth has stalled under majority ownership by a Chinese entity.

      Italy might suspend China's voting rights at Pirelli if negotiations fail.

      The Italian government may soon become more involved in Pirelli's intended expansion into the US market, potentially taking steps to suspend the voting rights of Sinochem, the Chinese state-owned enterprise that currently holds a 34 percent stake in the Italian tire producer.

      For several months, Pirelli and its Italian partner Camfin have contended that Sinochem's role as the primary shareholder has hindered efforts to expand the business in America, especially as the US tightens regulations on Chinese technology in the automotive sector.

      According to Reuters, Italy’s "golden power" law empowers the government to restrict shareholder rights in companies deemed strategically important. Pirelli falls into this category, and Sinochem, sensing the tension, is reportedly considering a divestiture. The company has engaged BNP Paribas to provide advice on the potential sale of its stake.

      Industry Minister Adolfo Urso noted that discussions are ongoing between the Italian and Chinese shareholders of Pirelli. There is also speculation that a compromise could be reached allowing Sinochem to reduce its holdings rather than exit entirely.

      Sinochem's substantial stake in Pirelli has burdened the tire company for several years, and there is growing urgency to find a solution. In March, new US regulations will take effect, restricting the use of Chinese technology in vehicles sold domestically. This could pose challenges for Pirelli, given that a significant share of the company is owned by a Chinese firm.

      The Financial Times indicates that if an agreement is not reached between Pirelli and Sinochem by January, the Italian government may consider intervening. Such intervention could involve suspending Sinochem’s voting rights to streamline Pirelli's US strategy.

      Sinochem initially acquired Pirelli in 2015 and publicly listed the company in Milan two years later. It previously sought to consolidate its control over the tire manufacturer, which led to an intervention from the Italian government in 2023.