Pirelli-Sinochem is the Golden Power test for Chinese sights
The case Pirelli-Sinochem as a test to measure the government’s ability and leeway to limit Chinese investment in strategic sectors. The real game, it is explained, will be played on a much more relevant front for national security: the presence of the Chinese State Grid in the shareholding of Cdp Reti. Meanwhile, Pirelli announces that it has moved the shareholders’ meeting to June 29th next, just to wait for the Golden Power proceedings initiated by the government. The meeting was originally scheduled for 30 maggio.
Clarity in governance
According to what has been reconstructed, the involvement of Palazzo Chigi may be an opportunity for the group of Bicocca to clarify its governance. Taking a cue from the notification by the Chinese of the renewal of the shareholder agreement of Pirelli. But, it is explained, the current legislation of the Golden Power would leave room for maneuver limited. Mainly because it was designed for verification and eventual preventive block of operations and not as a tool for subsequent intervention
The new European legislation
Aid to the government could come from the entry into force, on 12 June, of the Foreign Subsidies Regulation (fsr). It is a European regulation that allows the EU Commission to intervene to block or limit operations in theEuropean Union of operators from non-EU states. When these operators are subsidized – even in the form of privileged access to credit – by the state of origin, thus leading to a distortion of the competition. The latter is a characteristic of most Chinese operators who have invested in Europe.
Scrutiny of operations
The new legislation applies not only to mergers and acquisitionsbut also ad contracts it’s at supply contracts of the public sector. Among the tools envisaged, there is also the possibility for the Commission offices to open one investigation on its own initiative (“out of office“) for each type of “economic activity or market situation (…) when there is the suspected that a foreign subsidized subject may be involved”, reports a informative document of the Commission on the new legislation. “Starting from its entry into force, the FSR can represent the tool to eradicate Chinese investments already made but no longer welcome thanks to the sifting mechanism out of office“, explains Francesco Galiettiad of Policy Sonar.
The match inside Pirelli and the rumors about Brembo
Into this scenario, the entirely internal game of Pirelli fits. The recent entry of Brembo with 6% in the capital of Bicocca he sparked speculation on the market of a possible deal for one further climb. At the moment, Sinochem has 37% stake, followed by 14.1% of Faith (Tronchetti Provera) and precisely from 6% of Brembo. Last March 3, Brembo’s number one said that a merger between Pirelli and Brembo “it’s not on the table“. While previously Sinochem had denied the rumors which indicated the Chinese group as intending to sell the stake.
Cdp Reti and the Chinese of State Grid
For Palazzo Chigi, however, the real theme is that of Cdp Reti. This company owns the majority shares of Terna (29,5%), Snam (31,35%) e Italgas (25.99%) Next to Deposit box (59%) in the shareholding of the company there is the Chinese state-owned company State Grid with 35%. The remaining share is in the hands of a number of institutional investors Italians. In 2014, State Grid paid 2.1 billion for the stake in Cdp Reti. But the scenario now is radically changed. And the presence of a Chinese state entity – however limited in the governance – in the safe that manages the country’s electricity and gas networks, it arouses more than one concern.
Macron in Beijing
But also against the Chinese, the EU appears to be anything but united. The French president has arrived in Beijing Emmanuel Macron. A long private dinner with the Chinese president is also on the agenda of the tenant of the Elysée Xi Jinping. The two presidents will spend about eight hours together in efforts to strengthen personal relationships. At the center of the talks there will certainly be the war in Ukraine. But the economic relations between the two countries will also play a central role. Macron is in fact in Beijing with a large delegation, including four ministers (including Economy and Foreign Affairs) and beyond 50 top manager of giants like Edf, Alstom, Veolia e Airbus.