Source: Financial Post post
MILAN, Italy — The head of Pirelli said there were no plans to merge with Brembo after the brakes maker bought a small stake in the Italian tire maker, downplaying speculation on this week of a tie-up between the two Italian auto brands.
On March 30th, Brembo said it had taken a 2.43 percent stake in Pirelli with “a non-speculative, long-term approach” and it had made the move “autonomously.”
The surprise move raised speculation it could be the first step towards a future integration of the two groups, both focused on premium market segments, to create an Italian heavyweight in car parts supply, as the industry faces the challenges of the transition to electric mobility.
It also comes as the coronavirus pandemic plunges the global car sector deeper into crisis, hurting demand and damaging share prices.
“There are no plans for a merger with Brembo. They made an investment, we are happy they did so,” Pirelli CEO Marco Tronchetti Provera said. “I knew about the Brembo move when it was done. I don’t see it as hostile. They have trust in us.”
Analysts saw a logic however in combining the businesses.
“On the back of the strong contraction of their respective market capitalizations and considering the premium positioning of the two companies, we think a potential merger between Pirelli and Brembo would make sense overall even if the combination would generate synergies only on the cost base side,” said Monica Bosio, an analyst at Intesa Sanpaolo.
Brembo’s executive deputy chairman Matteo Tiraboschi last year said the brake maker was eyeing an acquisition target of “significant size,” even as big as Brembo itself.
But he never gave precise details about what target Brembo was looking at, beyond confirming a generic commitment to the automotive industry.
For this purpose, Brembo approved a loyalty share scheme that allows its family owners to retain control, even if their stake falls below 50 percent after an acquisition.
