Italy exercises 'golden power' to limit Sinochem's influence on Pirelli

ROME—The Italian government has exercised its "golden power" on Pirelli & C. S.p.A. to reduce major shareholder Sinochem's influence on the tire maker.

Under the golden power rule, the government can impose conditions or veto transactions, investments or corporate resolutions that could threaten Italian public interests.

The decision to exercise the power aims to protect Pirelli's "strategic assets," including "cyber sensors that are implanted in tires," the government said in a statement June 15.

The sensors, it said, can collect vehicle data concerning, among other things, road conditions, geolocation and the state of the infrastructures.

This information can be processed in super computers to create complex digital models that can be used in systems such as smart cities and digital twins, said the government.

The technology can be applied to several sectors, including industrial automation, machine-to-machine communication, machine learning, advanced manufacturing and artificial intelligence.

"For these sectors, 'cyber' is configured as a critical technology of national strategic importance," the government said.

As such, it added, the "improper use" of the technology can lead to "considerable risks not only for the confidentiality of user data, but also for the possible transfer of information relevant to security."

Without further elaborating, the government said the move intended to create "a network of measures that will protect the independence of Pirelli and its management."

Furthermore, the measure will ensure "the safety of procedures in Pirelli," the protection of data that is "of strategic importance" and the know-how possessed by the tire maker.

It also aims to provide Pirelli "with a series of tools for the protection of the strategic asset," it said.

This includes "a strategic industrial security clearance which provides for limits of accessibility to information."

Following the golden power procedure, Pirelli will also set up an "autonomous" organizational unit for safety.

For some strategic decisions of the board of directors, the government also requires a vote of at least four-fifths of the board of directors.

According to Reuters, the government has also ruled that Sinochem cannot designate the chief executive of tire maker, despite being Pirelli's biggest shareholder.

Italy's government triggered the golden power procedure in April after a Sinochem notification of plans to renew Pirelli's year-old shareholder agreement.

Chinese group Sinochem currently holds a 37-percent stake in Pirelli, through its investment vehicle Marco Polo International.

Other major investors include Silk Road Fund (9 percent), Camfin (14.10 percent), LongMarch (3.68 percent) and Brembo (6 percent).

The remaining shares are mainly owned by institutional investors and as well as retail investors, among others.