Pirelli’s board is urging Sinochem, its largest shareholder based in China, to reduce its stake amid concerns that the Trump administration’s aggressive stance on Chinese ownership of American assets might hinder the Italian tire manufacturer’s expansion in the United States. This issue was brought up at a Pirelli board meeting, where management requested that the Chinese investor cut its 37% stake to less than Camfin’s 26.4% holding, according to sources familiar with the matter.
This action highlights the significant adjustments companies are making in response to the policies of U.S. President Donald Trump’s administration. Recently, the Korean automotive group Hyundai announced substantial investments in the U.S., launching a $21 billion package, which Trump cited as proof that his trade strategies were effective in promoting domestic manufacturing.
Pirelli has proposed that Sinochem reduce its stake below 25% through a share buyback, with some shares potentially being resold on the market immediately, sources said. It remains uncertain whether Sinochem, represented at the meeting by its president Jiao Jian, who is also Pirelli’s chairman, will agree to this proposal, as discussions before the board meeting did not result in an agreement, according to insiders.
Neither Pirelli nor Sinochem provided comments on the matter. Pirelli operates a factory in Georgia but primarily manufactures tires for the North American market in Mexico and South America. In light of Trump’s trade policies and the risk of tariffs on imported cars, Pirelli is looking to expand its U.S. operations, which account for a quarter of its global revenue.
However, the company has faced opposition in recent U.S. discussions regarding its expansion plans, reportedly due to its largest shareholder being a Chinese state-owned enterprise. Pirelli, a supplier of Formula 1 tires, also owns technology that integrates tire sensor data with vehicle driving commands, which is highly sought after in the U.S. There is concern that Sinochem’s stake may exclude Pirelli from tapping into this potentially profitable market.
In January, the U.S. imposed restrictions on Chinese automated driving systems and associated technologies, including Bluetooth, WiFi, and satellite communications. ChemChina, which later merged with Sinochem, initially acquired a majority stake in Pirelli through a $7.7 billion transaction in 2015. The initial agreement stipulated that the Chinese investor would not interfere with Pirelli’s daily management, strategic decisions, or appointments.
This latest development follows less than two years after Italian Prime Minister Giorgia Meloni’s administration imposed restrictions on Sinochem’s shareholder rights within Pirelli, utilizing Italy’s “golden power” foreign investment screening mechanism. This state intervention followed ongoing tensions between Pirelli’s Italian leadership, including former CEO Marco Tronchetti Provera, and Sinochem, as Beijing aimed to consolidate its influence over the historic Italian industrial group.
Sinochem’s attempts to tighten control during a period of increased geopolitical tension have led to conflicts with Pirelli’s management. These disagreements peaked with Sinochem’s 2023 attempt to revise the shareholder agreement, aiming to diminish Camfin’s, where Tronchetti Provera is the main shareholder, permanent right to appoint Pirelli’s CEO.
