Pirelli Announces CEO Succession Plan Following Chinese Investor’s Influence Concerns
In a move to curb the influence of Chinese investor Sinochem over Pirelli, Italian tire maker, Pirelli has announced a new succession plan after the resignation of Marco Tronchetti Provera’s hand-picked replacement as chief executive. The current deputy chief executive, Giorgio Bruno, who was expected to take over, has decided to leave the company. Chief operating officer and former CEO of Pirelli’s Italian operations, Andrea Casaluci, will now succeed Tronchetti Provera next month. Camfin, the investment vehicle of Tronchetti Provera, will have the right to appoint the company’s CEO on an indefinite basis.
Chinese Investor’s Influence Curbed Amid Growing Concerns
The decision comes after Sinochem, Pirelli’s largest shareholder with a 37% stake, had its right to appoint a chief executive stripped by Roma. This move was prompted by increasing fears about the Chinese state-owned chemical group’s tightening grip on the renowned Italian brand. Sinochem had acquired its stake in Pirelli through its merger with ChemChina in 2021. Tensions have been brewing between Pirelli’s Chinese and Italian shareholders in recent years, particularly when it comes to succession planning and Tronchetti’s designation rights.
Details of the Succession Plan and Resignation
According to sources close to Pirelli, Casaluci, who previously worked for Pirelli’s Chinese operations, was brought in just days ago after Bruno informed Tronchetti Provera of his intention to step down and pursue his own business venture. Both Bruno and Casaluci have been long-time allies of Tronchetti Provera. Tronchetti Provera expressed his best wishes to Bruno and stated that their collaboration will continue.
Reactions and Implications
Analysts believe that Rome’s intervention in Pirelli is not the worst-case scenario for Sinochem since Italy has not enforced a stake sale or completely frozen Sinochem’s voting rights. The Chinese company has 60 days to appeal the decision. Chinese senior executives are currently in Milan to discuss business with their Italian partners and advisers. Beijing’s foreign ministry hopes that Italy will provide a fair and non-discriminatory business environment, effectively protecting the legitimate rights of Chinese companies.
Additional Piece: The Influence of Foreign Investors in Italian Companies
The case of Pirelli and its struggle with Chinese investor Sinochem highlights the complex issue of foreign investors’ influence on Italian companies. With the global economy becoming increasingly interconnected, it is common for companies to attract investments from abroad. However, this also raises concerns about foreign entities gaining control or exerting excessive influence over local businesses.
Italy, like many other countries, has wrestled with striking a delicate balance between welcoming foreign investments and safeguarding national interests. On one hand, foreign investments can bring capital, expertise, and access to larger markets, stimulating economic growth and job creation. On the other hand, there is a fear of losing control over strategic industries and falling prey to the agendas of foreign shareholders.
In recent years, Italy has been grappling with the implications of Chinese investments in its economy. China’s Belt and Road Initiative has facilitated significant investments in different sectors, including manufacturing and infrastructure. While these investments have their benefits, they have also sparked concerns about China’s growing influence and the potential for strategic assets to fall under foreign control.
The case of Pirelli underscores the importance of effective corporate governance and clear regulations to protect national interests. Italy’s move to curb Sinochem’s influence over Pirelli demonstrates its commitment to maintaining control over one of its best-known industrial brands. However, it also highlights the complexities of managing relationships with foreign investors.
As Italy continues to navigate these challenges, it must strike a delicate balance between attracting foreign investments and safeguarding national interests. Clear guidelines and regulations, as well as ongoing dialogue and cooperation between foreign investors and Italian authorities, are crucial in building mutual trust and ensuring the long-term success of such partnerships.
Summary:
Pirelli, the Italian tire maker, has announced a new CEO succession plan following the resignation of Marco Tronchetti Provera’s hand-picked replacement as chief executive. The move comes after Roma stripped Chinese investor Sinochem, Pirelli’s largest shareholder, of its right to appoint a CEO. Giorgio Bruno, who was expected to take over, decided to leave the company, leading to Andrea Casaluci, Pirelli’s current COO, being appointed as the successor. The decision reflects growing concerns about Sinochem’s influence over the renowned Italian brand. The case reflects a wider challenge of managing foreign investors’ influence on Italian companies, which requires a delicate balancing act between attracting investments and safeguarding national interests.
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Pirelli has announced a new succession plan following the resignation of Marco Tronchetti Provera’s hand-picked replacement as chief executive, days after Italy announced measures to curb Chinese investor Sinochem’s influence over the Milan-based tire maker.
The company said on Tuesday that chief executive officer Andrea Casaluci will succeed Tronchetti Provera next month after Giorgio Bruno, the current deputy chief executive who was expected to take over, decided to leave the company.
The decision comes on Friday after Roma stripped SinochemPirelli’s largest shareholder with a 37% stake of its right to appoint a chief executive amid growing fears about the Chinese state-owned chemical group’s tightening grip on one of Italy’s best-known industrial brands.
This move means that Camfin, the investment vehicle of Tronchetti Provera and a 14% shareholder of Pirelli, has the right to appoint the company’s CEO on an indefinite basis. The intervention followed a review triggered by Sinochem’s attempt to revise a shareholders’ agreement with Camfin that gave the Chinese company the right to appoint once Bruno succeeded Tronchetti Provera.
People close to Pirelli said Casaluci, who worked for Pirelli’s Chinese operations and was the group’s chief operating officer and chief executive officer of its Italian operations for nearly two years until 2018, was deployed just days ago after Bruno had told Tronchetti Provera that he intended to step down to pursue his own business venture. Bruno and Casaluci are both longtime allies of Tronchetti Provera.
“Bruno would never have resigned before being sure that the new designated successor would have been chosen by Tronchetti and not by the Chinese,” said a person close to the company.
“I wish Mr. Bruno my best wishes for the challenges that await him,” Tronchetti said in a statement on Tuesday, adding that the couple’s collaboration will continue.
Sinochem acquired its stake in Pirelli through the 2021 completion of its merger with ChemChina, which bought the Italian tire maker in 2015 for $7.7 billion before relisting it in Milan in 2017.
While tire tycoon Tronchetti Provera remained CEO during the ownership changes, tensions have grown in recent years between the company’s Chinese and Italian shareholders, with succession planning and Tronchetti’s designation rights among the nodes.
China’s foreign ministry told the Financial Times in a statement that Beijing “has always supported Chinese companies to expand their international partnerships based on market principles.
“[We] I hope that Italy can provide a fair, just and non-discriminatory business environment and effectively protect the legitimate rights of Chinese companies.”
Sinochem has yet to comment on Rome’s move to deprive it of key governing rights. The group has 60 days to appeal the decision. Chinese senior executives are in Milan this week to discuss business with their Italian partners and advisers, according to three people close to Sinochem.
Some analysts said Rome’s intervention in Pirelli was not the worst possible case for the Chinese company, noting that Italy had stopped short of forcing a stake sale or completely freezing Sinochem’s voting rights.
“In the near term, pressure on shares should ease somewhat as Italy has not officially asked the Chinese to sell their stake,” Oddo Bhf analysts wrote in a note to clients, though it added that ” governance uncertainties remain (too) high”. .
Additional reporting by Yuan Yang in London
https://www.ft.com/content/c5d23522-fe10-4808-bc01-ffc184587b7a
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