After years of economic decline, Italy has become a hunting ground for Chinese companies wanting to take control of corporate names appreciated but cash-strapped as Pirelli, and are no longer investing from the backseat.
"The Chinese have the capital, Italy has the brands, products and know-how, but no money," said a banker with direct knowledge of the agreement Pirelli.
China National Chemical state-owned (ChemChina) is to buy the fifth largest tire manufacturer in the world Euro 7.1 billion ($ 7,700,000,000) agreement to put 143 year old Italian company in Chinese hands.
The proposed acquisition, announced on Sunday, is one of the largest acquisitions by a Chinese company in Europe and after a series of purchases produced by Chinese investors in the third largest economy in the eurozone, which is struggling to its longest recession since World War Two.
The shopping spree included Chinese companies Terna and Snam mains (SRG.MI), manufacturer of Ansaldo turbines and luxury yacht maker Ferretti, as well as a number of small holdings acquired by the Chinese central bank in Italian blue chips .
China European deals usually have focused on significant stakes, but not the total control ChemChina obtained in Pirelli.
"I think this is a clear sign that they do not want to invest behind the scenes longer. They want to play a prominent role in the spotlight," said Alberto Forchielli, manager of Mandarin Capital Partners Director.
Growing importance of China as an investor partner in Europe was highlighted last week when Italy joined Britain, France and Germany in supporting infrastructure in Asia led by China, Investment Bank despite opposition from the United States.
A study published by KPMG before the agreement Pirelli said Chinese acquisitions in Italy amounted to € 10 billion in the past five years, half of them in 2014. Last year, almost a third of purchases abroad in Italy were Chinese, he said.
There is no shortage of targets. Bankers say Dawn China Duty Free is one of the potential bidders to buy a stake in the travel portal of World Duty Free Benetton family, Lotte Group in South Korea.
Troubled lender Banca Monte dei Paschi di Siena, which is seeking a buyer, is also attracting interest from China, sources close to the matter told Reuters. And oil services groupSaipem was courted by unknown Chinese suitors last year, sources have said.
"Asian investors are becoming big, make no mistake," said an investment banker. "Italy is one of the European markets more open and under-invested."
The government of Italian Prime Minister Matteo Renzi has indicated that he will not stand in your way.
The main drawbacks of foreign investments in Italy have long been the lack of growth and Byzantine legal and regulatory framework, say bankers.
Renzi has undertaken to modernize the economy and reduce bureaucracy. After more than a year in power still seems to be enjoying a honeymoon period with foreign investors. And gathering planned for this year is helping the economy.
Renzi, an avid tweeter on all subjects, has been unusually silent on the takeover of Pirelli but his government has done more protectionist noises ChemChina, even as it became one of the most famous Italian corporate names.
Bankers say that the attitude of Italy is encouraging Asian investments, while Italian companies gain exposure to the huge Chinese market.
Joel Backaler, author of "China Goes West", said Chinese companies need to invest in Europe to make their own highly competitive domestic market.
"With the costs of labor and increased energy and pressure on increasing margins, Chinese companies who want to sell at a higher price to have something different, for example, the tires better quality than those that can be found in China, "he said.
He and other experts said the Pirelli agreement, under which ChemChina get a majority stake in the new holding control tire manufacturer, may also signal a more muscular than before investment approach.
The agreement provides for the board of the new holding will be divided equally between the Chinese and the existing shareholders of Pirelli, the Italian management and stays on.
Under the agreement, a "super-majority" equal to 90 percent of the capital to move the headquarters of Pirelli outside Italy or transfer its intellectual property to third parties, giving its Italian shareholders veto power is required.
But bankers said there was little doubt who would be calling the shots increasingly Pirelli.
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