Change to Pirelli succession plan after Rome loosens Sinochem’s grip

Pirelli has announced a new succession plan following the resignation of Marco Tronchetti Provera’s handpicked replacement as chief executive, days after Italy announced measures to curb the influence of Chinese investor Sinochem over the Milan-based tyremaker.

The company said on Tuesday that general manager Andrea Casaluci would succeed Tronchetti Provera next month after Giorgio Bruno, the current deputy chief executive who had been due to take the driving seat, decided to leave the company.

The decision comes after Rome on Friday stripped Sinochem, Pirelli’s biggest shareholder with a 37 per cent stake, of its right to appoint a CEO amid growing fears over the Chinese state chemicals group’s tightening grip on one of Italy’s best-known industrial brands.

That move means Tronchetti Provera’s investment vehicle and 14 per cent Pirelli stakeholder Camfin has the right to appoint the company’s chief executive indefinitely. The intervention followed a review sparked by Sinochem’s effort to revise a shareholder pact with Camfin that gave the Chinese company the appointment rights once Bruno succeeded Tronchetti Provera.

People close to Pirelli said Casaluci, who worked for Pirelli’s Chinese operations and was the group’s chief operating officer and chief executive of its Italian operations for almost two years until 2018, was lined up a few days ago after Bruno told Tronchetti Provera he planned to step down to pursue his own business venture. Bruno and Casaluci are both longtime allies of Tronchetti Provera.

“Bruno would have never stepped down before being sure the new designated successor would be picked by Tronchetti and not the Chinese,” said one person close to the company.

“I offer Mr Bruno my most deeply felt good wishes for the challenges before him,” Tronchetti said in a statement on Tuesday, adding that the pair’s collaboration would continue.

Sinochem acquired its stake in Pirelli through the 2021 completion of its merger with ChemChina, which bought the Italian tyremaker in 2015 for $7.7bn before relisting it in Milan in 2017.

While tyre tycoon Tronchetti Provera remained as CEO through the changes of ownership, tensions have grown in recent years between the company’s Chinese and Italian shareholders, with succession planning and Tronchetti’s designation rights among the sticking points.

The Chinese foreign ministry told the Financial Times in a statement that Beijing “has always supported Chinese companies to expand their international partnerships on the basis of market principles.

“[We] hope that Italy can provide a fair, just, non-discriminatory business environment, and effectively protect the legitimate rights of Chinese companies.”

Sinochem has yet to comment on Rome’s move to strip it of key governance rights. The group has 60 days to appeal against the decision. Senior Chinese executives are in Milan this week to discuss business with their partners and Italian advisers, according to three people close to Sinochem.

Some analysts have said Rome’s intervention in Pirelli was not the worst possible case for the Chinese company, pointing out that Italy had stopped short of forcing a stake sale or entirely freezing Sinochem’s voting rights.

“Near term, pressure on the shares should go down a bit as Italy did not officially ask Chinese to sell down their stake,” Oddo Bhf analysts wrote in a note to clients, although it added that “governance uncertainties remain (too) high”.

Additional reporting by Yuan Yang in London