Italy resisting calls from Pirelli to tighten curbs on Chinese shareholder, sources say

ROME, June 4 (Reuters) - The Italian government is resisting calls from Pirelli's (PIRC.MI), opens new tab executive vice-chairman Marco Tronchetti Provera to tighten curbs imposed on the tyremaker's Chinese investor, sources said.
Chinese state group Sinochem (600500.SS), opens new tab is Pirelli's largest investor with a 37% stake, while Tronchetti Provera's Camfin vehicle holds a 27.3% shareholding. Tronchetti Provera has been the company's top boss for more than three decades.
Pirelli itself and Camfin are at odds with Sinochem, claiming that its substantial holding poses a risk to Pirelli's ambitions to expand its business in the United States.
Washington is cracking down on Chinese technology in the automotive industry, by banning key software and hardware from Chinese-controlled companies in connected vehicles on U.S. roads.
Tronchetti Provera is lobbying the government to take further action to limit the Chinese influence at Pirelli, two sources familiar with the matter said, by strengthening the restrictions that Rome imposed on Sinochem in 2023 through the golden power rules aimed at protecting strategic assets.
However, Prime Minister Giorgia Meloni's administration has so far rebuffed these calls, the sources added, asking not to be named due to the sensitivity of the matter.
Rome's cautious stance partly stems from concerns it would rely excessively on its golden powers, one of the sources said, at a time when Italy faces a legal dispute with UniCredit over the way it uses the tool in vetting banking deals.
All parties declined to comment.
The government, which has ruled that Pirelli must not be subject to instructions from the Chinese investor, last November launched an investigation to check whether the presence of Sinochem executives on the tyremaker's board was in breach of these curbs.
The inquiry is under way and before considering a harder stance on Sinochem, the government will at least check for violations of existing restrictions, the second source said.
Emanuele Orsini, the head of Italian business lobby Confindustria of which Pirelli is a leading member, called on the government to defend the autonomy of the Italian group.
"Part of Pirelli's shareholding, which is now in the hands of the Chinese government, is not approving the balance sheets and is therefore jamming up Pirelli, so I think something has to be done," Orsini said on Wednesday.
In previous remarks on Tuesday, Orsini argued Sinochem should cut its stake in Formula One tyre supplier Pirelli to below 25%.
Talks over governance adjustments have so far failed, with Camfin and Sinochem remaining far apart.
Last month, the Chinese company described a proposal put forward by Pirelli to solve problems as "seriously unfair", while Camfin said that Sinochem's approach could lead to breaking the shareholder pact still in place between the two largest investors.
Should the agreement be dropped, Sinochem and Camfin would be in a position to present separate slates at Pirelli's shareholders' meeting (AGM) next year, with one of them potentially taking full control of Pirelli's board.
Two separate sources told Reuters that Tronchetti Provera was relying on further government support through golden powers in the event of a final clash with Sinochem at the AGM.
Pirelli has been posting good results despite ongoing struggles in the auto industry. Its net profit rose 27% in the first quarter, while revenues were up 4%.

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