ChemChina $7.7 billion acquisition of Pirelli

Overview:

• ChemChina has acquired Pirelli—the world's fifth-largest tire maker—for €8 billion. 
• After execution of transaction documents relating to this Pirelli deal in late March 2015, the Chinese party acquired 100% of Pirelli’s share capital in November 2015.
• Pirelli's ordinary shares were delisted from the Milan Stock Exchange.
• The acquisition is being enacted by ChemChina subsidiary China National Tire & Rubber Company.
• The deal involved the laws of many jurisdictions, including Italian law, Hong Kong law, Luxembourg law and PRC law.
• The deal has been structured in multiple transaction steps, including the voluntary tender offer, mandatory tender offer, sell-out procedure and squeeze-out procedure.
• In order to finance the share purchase, ChemChina used its own funds, and also obtained a syndicated loan provided by the syndicated banks of China Development Bank, China Construction Bank and the Export-Import Bank of China.
• Silk Road Fund also made an equity investment related to ChemChina’s acquisition of Pirelli.
• This deal is subject to the PRC anti-monopoly review on concentration of business operators, as well as other anti-trust review in many jurisdictions.
• The transaction is the latest in a series of takeovers in Italy by cash-rich Chinese buyers taking advantage of a weak euro just as Europe is slowly emerging from economic stagnation.
• It also represents the sale of another of Italy's industrial icons, after a string of deals in recent years in sectors from fashion to food to engineering to energy, as decades of stagnation have eroded the country's economic base.

Adam Majeed - Regional Editor