Italy Cuffs China's Pirelli Board Influence

The Italian government has imposed restrictions on the number of directors Chinese state-owned Sinochem Group can appoint to the board of tiremaker Pirelli & C SpA. Approved this week, these measures leverage Italy's "Golden Power" rules to protect strategic assets and ensure Pirelli's continued access to the vital US market. This intervention caps a period of negotiation after shareholder talks failed to yield a compromise. The decision was made to address stricter US regulations on Chinese technology that could impact Pirelli's revenue, with the US market accounting for over 20% of its sales.

Under the new rules, Sinochem's vehicle in Pirelli can nominate a maximum of three candidates to the board, none of whom can serve as chairman or chief executive. While there are no nationality restrictions, two of the three nominated members must be independent of Sinochem. This significantly reduces Sinochem's current representation, as they presently hold eight seats on Pirelli's 15-member board. The Italian government's move also underscores a broader strategic shift, with Prime Minister Giorgia Meloni previously withdrawing Italy from China's Belt and Road Initiative while seeking to maintain pragmatic relations.