MercoPress. South Atlantic News Agency

Italy blocks Chinese company from taking control of tyre giant Pirelli

Beijing-controlled chemical giant Sinochem is Pirelli's biggest shareholder, with a 37% stake in the 151-year-old Milan-based firm.

Italy has moved to block a Chinese state-owned company from taking control of tyre making giant Pirelli. The decision is part of measures announced by Italy's government to protect businesses considered strategically important, and as such Pirelli's independence.

Beijing-controlled chemical giant Sinochem is Pirelli's biggest shareholder, with a 37% stake in the 151-year-old Milan-based firm.

On Sunday, Pirelli said in a statement to investors that the Italian government had ruled that only Camfin - a company controlled by Pirelli's boss Marco Tronchetti Provera - could nominate candidates to be its chief executive.

Pirelli also said the government had decided that any changes to the company's corporate governance should be subject to official scrutiny.

It came after Sinochem told the Italian government in March that it planned to renew and update an existing shareholder pact.

Italian Prime Minister Giorgia Meloni's administration examined the agreement under the so-called “Golden Power Procedure” rules, which are aimed at protecting businesses that are viewed as strategically important to the nation.

In 2015, Pirelli was sold for 7.1bn Euro (£6.1bn; US$7.8bn) to a group of investors including ChemChina and Camfin. Six years later ChemChina merged with state-owned Sinochem. The Chinese government's Silk Road investment fund also owns a 9% stake in Pirelli.