MOSCOW (Aug. 13, 2013) — Pirelli & C. S.p.A. is increasing its ownership stake in the Moscow joint venture that owns the Kirov and Voronezh, Russia, tire plants to 65 percent from 50 percent, according to Russian Technologies State Corp. (Rostec), one of the venture's partners.
Pirelli is paying an estimated $44 million for the 15-percent stake owned by GHP Group, a Russian investment group, according to Rostec.GHP retains an approximate 10-percent stake in the venture—now called Pirelli Tyre Russia—while Rostec retains its stake as well: 25 percent plus one share.
Pirelli has options in the joint venture agreement to increase its stake further until 2017 by acquiring GHP's residual stake and up to a 15-percent share from Rostec, Pirelli said in its half-year financial report.
Rostec and Pirelli agreed in November 2008 to create a joint venture to establish tire manufacturing in Russia.
That plan evolved over the following couple of years to an agreement to acquire the Kirov and Voronezh tire plant assets from Sibur holding.
Pirelli and its JV partners paid $300 million for the Sibur tire assets and agreed to invest another $265 million in modernization measures, Rostec said. By next year the plants' capacity should be reach 11 million units a year.
The venture already has spent $76 million at the Voronezh plant to install modern rubber compounding capacity that was necessary before the plant could start making Pirelli-brand tires.
The venture generated about $180 million in revenue in the first half of 2013, or roughly 4.5 percent of Pirelli's global sales.