BEIJING—China National Tire & Rubber Co. (CNRC) signed a binding agreement with Edizione s.r.l. to acquire an additional stake of Pirelli & C. S.p.A., giving the Chinese tire maker more than 30 percent of Pirelli's ordinary shares under contract.
CNRC, a subsidiary of China National Chemical Corp., said in a statement it will purchase the 1.57 percent stake from Edizione for 15 Euros per share, which is the same purchase price it agreed to purchase the 26.2 percent stake controlled by Cam Finanziaria S.p.A. At the time of the Camfin agreement, the price translated to $16.25 per share.
CNRC's agreement with Edizione also contemplates the sale of the exchangeable shares representing about 3 percent of the share capital of Pirelli, indirectly held by Edizione through Schematrentaquattro S.p.A.
The shares will be integrated into Bidco, a holding company controlled by CNRC that will launch a mandatory tender offer in an attempt to acquire all of Pirelli shares after the completion of the Camfin agreement at the same 15 Euro per share price. Its agreement with Camfin is expected to be complete by the end of summer.
The transfer of Edizione's Pirelli shares to Bidco comes with the condition that Camfin has sold its shares to Bidco. Edizione may also decide to postpone the transfer of its direct Pirelli stake to Bidco by way of acceptance of the mandatory tender offer.
CNRC said Edizione also has the right to terminate the share purchase agreement in the event of the launch of one or more competitive tender offers by third parties in respect of the Pirelli ordinary shares, unless Bidco announces an increase of the price of its offer to at least the same price as the last competitive offer.
ChemChina reported sales of $39.4 billion in 2013 and is considered China's largest chemical company. According to its website, it operates in six sectors: new chemical materials, basic chemical materials, oil processing, agrochemicals, rubber products and chemical equipment.
CNRC touts itself as China's largest producer of off-the-road 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.
Pirelli is the fifth-largest tire make in the world, according to Rubber & Plastics News' 2014 Global Tire Report, and reported 2014 sales of $7.98 billion.