Camfin, the holding company behind tyremaker Pirelli, is in talks with would see China National Chemical Corporation become its main shareholder in a deal valued at about €7bn.
The takeover would allow chairman Marco Tronchetti Provera to cut the Italian group’s exposure to Rosneft, its main shareholder, in the wake of western sanctions against Russia over Ukraine.
If successful, the deal would also be the latest example of Chinese investors picking up infrastructure assets in Italy as local investors have sold up during the country’s crippling triple dip recession.
In a statement, Camfin confirmed rumours that talks were under way to secure “an international industrial partner”.
The deal, which people close to the talks said was with CNCC, would see Camfin sell its entire 26 per cent stake at €15 per share to a new group of investors in which the Chinese would take a significant part.
Alongside Rosneft and Mr Tronchetti Provera, Camfin’s other main shareholders are Italian bankers Intesa Sanpaolo and UniCredit.
Once that deal is completed, the newly-formed vehicle would undertake a takeover of the remaining shares in Pirelli, Camfin said in a statement.
Shares in Pirelli rose 4 per cent to €15.56, their highest level in the past five years in early trading in Milan.
A deal struck a year ago with Rosneft to become Camfin’s largest shareholder has been strained by the roll out of sanctions on Russia over Ukraine.
People familiar with the negotiations said the deal would allow Mr Tronchetti Provera to ensure the whole or partial exit of Rosneft. The Russian company’s chairman, Igor Sechin — a close ally of President Vladimir Putin and a target of western sanctions — would also leave the board of Pirelli.
One banker said that Mr Tronchetti Provera was limited in his options for finding a partner to strike a deal with Rosneft as any US buyers would be banned under the sanctions.
The talks confirm the resilience of Mr Tronchetti Provera, a businessmen well connected among Italy’s establishment, who has been chairman of Pirelli since 2003 and chief executive since 2011.
Reuters reported the negotiations included a clause that would see Mr Tronchetti continue in his role until 2021 when he will be 73.
In the past year, Chinese investors have snapped up stakes in Fiat Chrysler Automobiles, Mediobanca, Telecom Italia, Prysmian, Eni and Enel.
In July last year, China’s state grid, the world’s largest utility, bought a 35 per cent stake in CDP Reti, a subsidiary of Italy’s state financing agency that controls the country’s electricity grid operator and gas distribution.
According to bankers, Chinese investors are looking at other Italian infrastructure assets including the port system in Venice.