Italy has approved measures to limit the shareholder rights of the Chinese chemical group Sinochem in Pirelli, the Milan-listed tyremaker and set out a wider range of sectors that the government judges to be of national security importance.
The decision is a rare intervention in an eight-year-old Chinese investment that had, so far, not been considered a strategic national asset. In 2015, a previous Chinese state-owned chemicals group had bought a majority stake in Pirelli, considered a crown jewel of Italian industry, for $7.7bn.
Prime minister Giorgia Meloni’s office said in a statement on Friday that the latest measures, passed under the country’s “golden power” foreign investment screening mechanism, were “aimed at creating a network of measures to safeguard Pirelli’s independence and its management”.
The FT revealed this month that Pirelli chief executive Marco Tronchetti Provera had lobbied Rome to intervene in the company’s shareholding arrangements, warning of the greater control that the Chinese government was taking in Pirelli’s business and governance decisions.
Tronchetti Provera, who has a minority stake in Pirelli, has been fighting with his Chinese partners over day-to-day management for the past few years. He has unsuccessfully tried to persuade them to sell part of their stake. Frictions within the company have also emerged over his pay, which in 2022 was €20.5mn.
Rome’s restrictions, which involve limits to accessing and sharing information between Pirelli and Sinochem and a four-fifths majority for some “strategic” board decisions, were aimed at protecting “strategically relevant information and the company’s knowhow”, Meloni’s office said.
The decision comes as the Italian government attempts the difficult balance of aligning itself more closely with the EU and US on foreign policy and re-evaluating its relationship with China, while at the same time not antagonising Beijing.
Meloni’s government is also considering an exit from Beijing’s flagship overseas investment project, the Belt and Road Initiative. Italy was the only European nation to join the BRI in 2019.
Last month, leaders from the US, EU and Japan united behind the idea of “de-risking” from China, speaking of a need to protect “certain advanced technologies that could be used to threaten our national security”.
The scope of what counts as assets of national security importance has been expanded in Italy and the EU since 2019, leading to an increase in applications filed under Italy’s screening mechanism, from 8 in 2014 to 496 in 2021.
Meloni’s office said a specific technology that allowed for the geolocation and collection of drivers’ information through a microchip installed on the tyres was critical and of national strategic importance.
“The misuse of such technology can cause a variety of risks for customers and national security,” the office said.