ITALY TO LIMIT NUMBER OF SINOCHEM DIRECTORS ON PIRELLI BOARD

(Bloomberg) -- The Italian government has taken steps to limit the number of directors that China’s Sinochem Group can appoint to the board of Pirelli & C SpA as it seeks to protect the tiremaker’s access to the US market, according to people familiar with the matter.

The measures, approved this week, are an application of the so-called Golden Power rules that enable Italy to protect assets it deems to be strategic. 

It also caps a yearslong saga for Prime Minister Giorgia Meloni, who has engaged in a delicate balancing act between Washington and Beijing.

Meloni’s government chose to limit Sinochem’s role after shareholder talks failed to produce a compromise. The dispute has gained urgency in light of tighter US rules on Chinese technology that threaten to restrict Pirelli’s access to its biggest market. Foreign Minister Antonio Tajani is set to travel to China on a trade mission next week.

With this latest move, Sinochem’s vehicle in Pirelli will only be able to present a maximum of three candidates to the board, and they won’t be able to assume the role of chairman or chief executive, the people said on condition of anonymity to discuss sensitive decision-making. 

There were no restrictions on nationality, the people added, but two of the three members are required to be independent from Sinochem. The rules remain in place as long as Sinochem holds more than 9.99% of the company’s shares, Pirelli said in a statement on Saturday.

Currently, Sinochem has eight directors on Pirelli’s 15-member board.

The decision was taken at a cabinet meeting Thursday and the interested parties were notified Friday, they added.

A representative for the Italian government wasn’t available for comment. A spokesman for Pirelli declined to comment. A representative for Sinochem didn’t have an immediate comment.

The US Commerce Department’s connected-vehicle regulations, which took effect this year, bar certain Chinese-linked hardware and software from domestic sales. Pirelli has said the US accounts for more than 20% of its revenue.

Meloni has distanced Italy from Beijing after coming to power, pulling out of China’s Belt and Road Initiative. She has since sought to balance her closer scrutiny of strategic assets with a pragmatic effort to keep relations with Beijing on workable terms.

Rome first intervened in Pirelli in June 2023, placing restrictions on the tiremaker’s governance and Sinochem’s role. At the time it cited the need to protect strategic technology and data linked to the company’s Cyber Tyre sensors.

Cyber Tyre technology is strategic because it pushes Pirelli beyond manufacturing into vehicle software and data. The system combines sensors embedded in the tire with Pirelli’s proprietary software to send the car detailed information on tire condition and road-surface status, making it relevant to safety, efficiency and other advanced functions in software-defined and connected vehicles. 

Pirelli also says the technology is already on the market, is being developed further on premium and prestige platforms, and has applications in road-monitoring infrastructure.

Pirelli has sought to show the dispute isn’t derailing the business. The company said in February it had met its 2025 targets, with net profit rising 5.9% and net debt falling more than expected, helped by stronger cash flow and lower leverage.

(Updates with company’s statement in sixth paragraph.)

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2026-04-10T21:57:02Z