YANZHOU, China—Pirelli & C. S.p.A. has struck a deal with China's Hixih Rubber Industry Group to buy a 49 percent stake in Jining Shenzhou Tyre Co., the new name for Hixih's tire manufacturing entity in Yanzhou.
The investment will give Pirelli the necessary production flexibility in the high-value tire segment in Asia, taking into account the evolution of the Chinese market, the expected developments in electric vehicles and the growing share of OE homologations with car companies in China, Japan and South Korea.
Under the terms of the agreement, Pirelli will pay roughly $75 million for the 49-percent stake in Jining Shenzhou Tyre with the right to increase the stake to 70 percent between Jan. 1, 2021, and year-end 2025.
Pirelli will take over management of the plant, set up in 2005 in the Yanzhou Hixih Industrial Park with technical assistance from Pirelli. The plant has rated annual capacities of 1.2 million radial truck tires, 10 million car tires and 3 million high-performance motorcycle tires, according to Hixih Group.