Pirelli to invest $75M for 49% stake in Chinese Tire Plant

Pirelli enters joint venture with China’s Hixih Group to invest $75 million for a 49% stake in a new consumer tire production plant in China.

The new joint venture, Shenzou Tyre Co, will give Pirelli the necessary production flexibility in the High Value segment, taking into account the evolution of the Chinese tire market, the expected developments in electric vehicles and the growing share of homologations obtained in the Original Equipment segment in China, Japan and Korea. Under the terms of the agreement, Pirelli will manage the operation of the plant and acquire a 49% stake in the JV for around $75 million with the right to increase it up to 70% in the period from 1 January 2021 to December 2025.

The transaction, which is subject to the obtainment of the relevant approvals from local authorities and the closing of which is expected to occur by the end of the current year, leaves all targets indicated in the 2017-2020 industrial plan unchanged.

“The acquisition of a significant stake in this technologically advanced consumer tire plant will reinforce the company’s High Value strategy, which identified the APAC area a key growth driver, through a strategy which calls for the continuous improvement of the product mix, the digitalization of processes and constant attention to environmental sustainability.” Pirelli said in a press release statement.

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