MILAN, Italy—China National Chemical Co. (ChemChina) has launched its bid to buy control of Pirelli & C. S.p.A. through a joint venture company in Italy, which is carrying out the previously outlined offer of 15 euros ($16.75) per share of Pirelli common and “savings” shares.
Marco Polo Industrial Holding S.p.A., the Milan-based company set up by ChemChina and Camfin S.p.A., announced the bid Aug. 11.
ChemChina, through its China National Tire & Rubber Co. (CNRC) subsidiary, owns 65 percent of Marco Polo Industrial Holding. Italian investment firm Camfin S.pA., together with a bevy of other industrial holdings, owns the remaining 35 percent.
The bid got rolling when Camfin transferred its 26.2-percent shareholding in Pirelli to Marco Polo Industrial Holding. That was preceded a week earlier by Camfin's announcement on the Borsa Italiana in Milan that the ChemChina/Camfin deal announced March 22 has cleared all antitrust and other relevant regulatory hurdles.
With Camfin's tranche secured, Marco Polo Industrial Holding will seek to buy as many of the remaining 364.3 million outstanding ordinary shares and 12.3 million “savings shares” of Pirelli as possible.
With operational control of the joint venture, ChemChina will be overseeing the mandatory and voluntary tender offers for the remaining Pirelli shares.
If all shares are tendered at the 15 euros-per-share offer, the deal would be worth $6.35 billion, the offer sheet states.
Pirelli shares closed at 15.04 euros on Aug. 11, down 1.4 percent from the close on Aug. 10, according to the stock tracker on Pirelli's website, which also showed that just 1.4 million shares were traded during the day.
Marco Polo Industrial Holding also is offering 15 euros per share through a “voluntary” tender offer for Pirelli “savings shares,” of which there are 12.3 million in circulation, the offer states. The goal here is to acquire at least 30 percent of these shares.
With the announcement of the bid, Pirelli said two of its board members—Paolo Fiorentino and Gaetano Miccichè—have resigned.
Pirelli Chairman Marco Tronchetti Provera also is involved in the deal through an investment company called Coinv, which he indirectly controls and which is a co-investor in the deal, the filing states.
Camfin's transfer of Pirelli shares to Marco Polo Industrial Holding on Aug. 11 will set into motion a series of transactions that eventually will give ChemChina outright control of Pirelli and allow it to take the Milan-based tire maker private.
It also would trigger a series of moves by ChemChina to restructure Pirelli, primarily involving the integration of Pirelli's industrial tire business—medium truck, agricultural and industrial tires—with those of Fengshen Tires Stock Ltd. Co., owner and producer of the Aeolus brand, Camfin said.
The process would create a business with an annual capacity of about 12 million commercial/industrial tires.
ChemChina also disclosed in June that it had gained China's Silk Road Fund, a recently launched Chinese investment fund, as a financial backer for its Pirelli bid.
Silk Road Fund, a $40 billion medium- to long-term investment fund established in Beijing in December 2014, signed an equity investment agreement with ChemChina on June 5 to take a 25-percent stake in CNRC International Holding (HK) Ltd., an entity set up by ChemChina to acquire, through its affiliates, Pirelli shares owned by Camfin S.p.A.
The agreements indicate that ChemChina, Silk Road Fund, Pirelli management and other partners involved in the transaction will join forces in the long-term industrial investment in Pirelli, ChemChina said.