China National Chemical Corp is to buy Pirelli, the world's fifth-largest tyre maker, in a 7.1 billion euro ($7.7 billion) deal that will place one of the symbols of Italy's manufacturing industry in Chinese hands. As Hayley Platt reports it's the latest in a string of deals between the two countries.
Its calendars are famous the world over. So are Pirelli's tyres. Now the 143 year old Italian company has agreed to a 7.1 billion euro deal with China National Chemical corporation. The move will give China access to top tyre making technology and Pirelli will get more export opportunities. Jane Foley is from Rabobank. (SOUNDBITE) (English) RABOBANK, SENIOR FX STRATEGIST, JANE FOLEY, SAYING: "The trend for China now to be more interested in technology companies is increased. Part of that is the attraction of the weaker exchange rate, once again we see a very weak euro again making these companies more attractive to investors such as the Chinese." The tie-up continues a growing trend. Last year alone, there were 10 deals between China and Italy, in various sectors including energy, banking and even fashion. China's State Grid Corp bought a 2.4 billion euro stake in state-owned power company CDP Reti. The People's Bank of China acquired 2 percent of oil giant Eni. Shanghai Electric Group bought 40 percent of turbine maker Ansaldo Energia. And the historic Krizia brand is now owned by Shenzhen Marisfrolg Fashion Pirelli is the world's fifth-largest tyre maker, supplying Formula 1's top team Ferrari. It's tie-up with China will help it compete with larger rivals like France's Michelin and Germany's Continental. Investors seemed to like the deal, Pirelli's shares rose another 3.5 percent after hitting a 25-year high last week when details of the deal were leaked. It comes as Italy's economy has been struggling - it's seen no growth for the past 14 quarters. (SOUNDBITE) (English) RABOBANK, SENIOR FX STRATEGIST, JANE FOLEY, SAYING: "Italy is probably not in a position really to have an amount of opposition if inward investment can provide more opportunities for Pirelli and other companies to sell their products in China then it is likely to produce growth and jobs for Italy." Pirelli Chairman and CEO Marco Tronchetti Provera who began working at the firm almost three decades ago was instrumental in making the deal happen. He'll stay on as Chief Exec but the new Chinese owners are expected to pick a new chairman.