Italy ends probe into Sinochem’s role at Pirelli, finds no breach

[MOSCOW, RUSSIA - FEBRUARY 05, 2022 Pirelli Tires wheel close up view. Pirelli Sottozero model tire logo close up view. Winter tires.]
Roman Vyshnikov

Italy dropped its investigation into Sinochem Holdings’ role at Pirelli & Co. (OTCPK:PLLIF [https://seekingalpha.com/symbol/PLLIF]) (OTCPK:PRLLY [https://seekingalpha.com/symbol/PRLLY]), concluding the Chinese shareholder did not overstep restrictions designed to curb foreign influence over the tiremaker.

Pirelli announced Monday that Prime Minister Giorgia Meloni’s office closed the case earlier this month, finding no indication that Sinochem or its representatives compromised the company’s independence. The review also looked into China National Tire and Rubber Corp., a Sinochem subsidiary.

The outcome makes it less likely that Rome will sanction Sinochem under Italy’s “golden power” rules, which give the government authority to protect strategic industries. Officials had opened the probe last year amid concerns that Sinochem’s 37% stake and board presence might give it undue sway over Pirelli’s (OTCPK:PLLIF [https://seekingalpha.com/symbol/PLLIF]) (OTCPK:PRLLY [https://seekingalpha.com/symbol/PRLLY]) operations.

A 2023 decree had already placed limits on Sinochem’s involvement and introduced safeguards for Pirelli’s Cyber Tyre, a connected-tire technology considered central to its future business.

The case has drawn international scrutiny as well. Earlier this year, the U.S. Commerce Department warned Italy that existing protections may fall short of insulating Pirelli (OTCPK:PLLIF [https://seekingalpha.com/symbol/PLLIF]) (OTCPK:PRLLY [https://seekingalpha.com/symbol/PRLLY]) from American restrictions on connected-vehicle technologies, Bloomberg News reported.

MORE ON PIRELLI & C. S.P.A., PIRELLI & C. SPA ADR

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