ChemChina's Pirelli tender offers OK'd (Update)

MILAN, Italy (Sept. 9, 2015) — The Italian stock exchange authority Consob has approved China National Chemical Corp.'s (ChemChina) voluntary and mandatory tender offers for Pirelli & C. S.p.A., setting the stage for the Chinese company to proceed with its declared takeover of the Italian tire maker.

ChemChina's offer, of 15 euros ($16.85) per share, is being carried out by Marco Polo Industrial Holding S.p.A., a company indirectly controlled by ChemChina's China National Tire & Rubber Co. Ltd. subsidiary.

The offer opened Sept. 9 and runs through the end of trading on Oct. 13, “barring extensions of the voluntary bid.”

A notice posted by Consob (Commissione Nazionale per le Societa e la Borsa) notes that Marco Polo Industrial Holding already controls 26.2 percent of Pirelli's ordinary shares, through its purchase outright of 96.8 million shares controlled by Italian investment company Camfin S.p.A. and via indirect control of additional shares through an investors' consortium.

The ChemChina/Marco Polo Industrial Holding offer was triggered automatically when Marco Polo's shareholding reached or exceeded the 26.2-percent threshhold, according to the terms of the deal stuck by ChemChina earlier with Camfin.

ChemChina's tender offer of 15 euros per share would put Pirelli's market value at approximately $8 billion, at the prevailing euro-dollar exchange rate.

Consob notes that Marco Polo's voluntary bid covers potentially 12.3 million “savings” shares, while the mandatory bid concerns 364.3 million shares, or 76.6 percent of of Pirelli's ordinary share capital, which the offer values at $6.35 billion.

ChemChina's ultimate goal is to de-list Pirelli's shares and take the company private. The company's stated strategy is to combine Pirelli's truck and farm tire assets with those of its China National Tire & Rubber Co. subsidiary to create an entity that the companies estimate would be the fourth largest commercial tire business globally.

Tire Business estimates this entity would generate annual sales of about $3 billion.

Pirelli shares closed at 15 euros per share at the end of trading Sept. 9, according to Pirelli's website, with 3.3 million shares traded.

Pirelli is the fifth largest tire maker in the world, according to Tire Business' calculations, with 2014 sales of $7.99 billion.

CNRC claims it's China's largest producer of OTR tires with Aeolus Tyre Co., ChemChina Guilin Tire Co. Ltd., Double Happiness Tire Industrial Co. Ltd. and Qingdao Yellowsea Rubber Co. Ltd. among its holdings.