Camfin ending Pirelli shareholder pact with Sinochem over US regulatory constraints

Milan, Italy – A dispute over Pirelli’s governance is continuing, as second-largest shareholder Camfin announced that it will not renew its shareholders’ agreement with the tire maker’s largest stakeholder, Sinochem, and has rejected a proposed solution by the Chinese party to resolve the issue.

In a 23 Jan statement, Camfin cited the inability to reach agreement on governance changes required to comply with US regulations on connected vehicles.

The decision, it said, was taken after acknowledging the “impossibility, at this stage, of identifying with Sinochem... solutions capable of adapting Pirelli’s governance in a timely manner to US regulatory requirements.”

The stalemate, Camfin noted, is thereby preventing Pirelli from continuing to develop its ‘cyber tire’ technology.

In a separate statement issued on 26 Jan, the Italian investor responded to a solution proposed by Sinochem affiliate China National Chemical Corp. (CNRC), saying the proposal “would be prejudicial to Pirelli’s business model” and to the company’s technological development.

Camfin said the proposal would not, in any event, allow Pirelli to comply with US regulations on connected vehicles.

It added that it had advanced an alternative proposal which, it said, “would have allowed Pirelli to align with US regulations with certainty”.

Camfin reiterated its willingness to continue discussions “in the interest of the company, the market and all stakeholders”.

According to press reports, CNRC is understood to have proposed spinning off the smart tire business into a new entity with no Chinese ownership, with the aim of addressing US regulations on connected vehicles.

The shareholders’ agreement, which expires on 18 May, was entered into force on 19 May 2023 and was originally signed in May 2022 by entities including China National Chemical Corp., China National Tire & Rubber Corp., CNRC International, Camfin and Marco Tronchetti Provera-controlled companies.

Camfin said the decision not to renew the deal also ensured “sufficient time” to complete the required legal formalities ahead of Pirelli’s shareholders’ meeting scheduled for 25 June.