MILAN, Italy (Aug. 2, 2016) — China National Rubber Co. (CNRC) and Pirelli & Co. S.p.A. have approved the transfer of ownership stakes in their respective consumer and industrial tire activities to each other.
The transaction, according to Pirelli, will boost its available annual consumer tire capacity in China by about 75 percent to 12 million units.
The asset swap is in line with terms of the merger to which the firms previously agreed.
CNRC has agreed to transfer to Pirelli an 80-percent ownership stake in the car tire activities of its Aoelus Tyre Co. Ltd. unit. Pirelli plans to transfer a 10-percent ownership stake in its industrial (truck and farm tires) business to CNRC.
The agreements also cover the the formalization of a license contract between Pirelli Tyre and Aeolus for the technology of the industrial segment, Pirelli said in its first-half financial statement.
The deal also calls for Aeolus to pay Pirelli a 1-percent royalty on sales in 2017 and 2 percent annually starting in 2018.
Pirelli's industrial tire business generated sales of $1.2 billion last year, but revenue through the first half of 2016 was down 21.6 percent on 7.3-percent lower volume and the negative effects of foreign exchange changes.