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Dealwatch: Clifford Chance, Linklaters and Latham advise on $7.7bn Pirelli sale to ChemChina

Clifford Chance (CC), Linklaters and Latham & Watkins are advising on the $7.7bn bid by China National Chemical Corp (ChemChina) to buy Italian tire-maker Pirelli, a deal that will give Chinese investors a significant foothold in Italy’s manufacturing industry while signalling continued Chinese investment into Europe.

ChemChina’s tyre-making division China National Tire & Rubber (CNRC) will first buy the 26.2% that Italian holding firm Camfin owns in Pirelli, and will then launch a mandatory takeover bid for the rest.

ChemChina and CNRC have instructed CC to advise on financing issues, as well as local firm Studio Legale Pedersoli e Associati for Italian law advice and Chinese firm Jun He on Chinese law. The deal saw a cross-border team from CC, led by finance partners Charles Adams and Giuseppe de Palma Milan and involving leveraged finance and high-yield partner Michael Dakin in the City and Beijing-based banking and finance partner Maggie Lo.

Linklaters advised private Russian investment company Long Term Investments which will enter into the shareholders agreement after the initial purchase with Milan-based corporate partners Giovanni Pedersoli, Pietro Belloni leading alongside Moscow-based partner Grigory Gadzhiev.

Latham & Watkins led for JP Morgan, which acted as underwriters on the deal, with a team including co-chair of global banking Christopher Kandel, capital markets partner Jeff Lawlis, and Milan-based partners Andrea Novarese and Maria Christina Storchi. Gianni, Origoni, Grippo, Cappelli & Partners provided Italian tax advice.

Local firm Chiomenti advised Pirelli’s holding company Camfin while Lombardi Molinari Segni handled financing aspects.

The deal agreed with Pirelli shareholders on Sunday with China National Tire & Rubber (CNRC), a subsidiary of ChemChina, envisages the ‘integration of the industrial tyre business of Pirelli and certain assets of CNRC, an expansion of Pirelli’s business in Asia, and a potential de-listing of [Milan-listed] Pirelli.’

Chinese investment into Europe hit record levels last year, with FDI transactions doubling to $18bn in 2014 compared to the previous year over 153 separate investments. According to research by Baker & McKenzie, Europe emerged as one of the top destinations for Chinese foreign investment globally, with Italy in second place as one of the top-five countries in 2014 for such investment.