(Bloomberg) — Pirelli C. SpA’s biggest shareholder
agreed to sell a seductiveness to ChemChina in a understanding that will lead
to a takeover bid valuing a Italian tiremaker during about 7.1
billion euros ($7.7 billion).

State-owned ChemChina concluded to compensate 15 euros a share for
the 26.2 percent of Pirelli owned by Cam Finanziaria SpA, or
Camfin, a companies pronounced in a statement. ChemChina will then
make a open proposal offer for a rest of a tiremaker during the
same price.

The bid is subsequent Friday’s shutting cost of 15.23 euros.
Pirelli’s batch jumped to a top turn given early 2002
after Italian journal reports emerged Thursday that Camfin was
in talks on a understanding with Asian manufacturers.

The squeeze would be a biggest understanding in Italy by a
Chinese association and concede Beijing-based ChemChina to jump onto
the general theatre with Pirelli’s high-end automobile tires. In
the transaction, a Italian association will double a volume of
its truck-tire business by a multiple with ChemChina’s
operations, adding distance as Europe’s top-two tiremakers, Michelin
Cie. and Continental AG, find to enhance with acquisitions,
particularly in Asia.

“The partnership with a tellurian actor like ChemChina,
through a affiliates, represents a good event for
Pirelli,” Chairman Marco Tronchetti Provera pronounced in the
statement. The manager and part-owner of Pirelli will sojourn as
chief executive officer of a Italian manufacturer underneath the
deal, while ChemChina will designate a new chairman.

Era Ending

China National Chemical Corp., as ChemChina is formally
called, expects to de-list Pirelli in a transaction, finale an
era for one of a many distinguished names in Italian industry. The
company was founded in Milan in 1872 by Giovanni Battista
Pirelli. Over a subsequent century, it stretched into cables,
telecommunications and genuine estate. In 2001 underneath Tronchetti
Provera, Pirelli engineered a takeover of Italy’s biggest phone
company, Telecom Italia.

That holding was sole in 2007 to lapse Pirelli’s concentration to
tires on a supposed reward segment, including outfitting
Formula 1 competition cars. Earnings before seductiveness and taxes rose 6.8
percent to 838 million euros final year, with income of 6
billion euros.

Under a agreement, Camfin skeleton to reinvest partial of the
proceeds it receives from a sale of a shares into a tender
offer. In a end, a understanding calls for ChemChina to reason during least
50.1 percent of Pirelli and Camfin as most as 49.9 percent.

Possible Re-Listing

Camfin is jointly owned by Tronchetti Provera, 67, and an
investment car of Russian oil writer OAO Rosneft, which
will keep an seductiveness in Pirelli. Following a transaction,
Pirelli will keep a domicile in Italy and might be re-listed
by Tronchetti Provera in 4 years.

Last year, Chinese companies bought about $3.5 billion in
Italian businesses, according to information gathered by Bloomberg.
Among those deals was a Nov sale by Italy’s state lender
of a 35 percent seductiveness in energy-grids holding association CDP Reti
to State Grid Corp. of China for 2.1 billion euros.

ChemChina owns Aeolus Tyres, a section that’s partial of
operations that embody oil estimate products, fertilizers,
pesticides and chemical equipment. In 2013, ChemChina generated
revenue of 244 billion yuan ($39 billion), according to its
website.

ChemChina, that will lift out a transaction around its
subsidiary China National Tire Rubber Co., expects a understanding to
close in summer, depending on receiving regulatory approvals.
ChemChina will also offer 15 euros any for Pirelli’s saving
shares. JPMorgan Chase Co. is underwriting a deal’s
financing.

To hit a reporters on this story:
Tommaso Ebhardt in Milan at
tebhardt@bloomberg.net;
Dan Liefgreen in Milan at
dliefgreen@bloomberg.net

To hit a editors obliged for this story:
Vidya Root at
vroot@bloomberg.net
Chris Reiter, Heather Harris