ChemChina's Pirelli buy backed by JP Morgan

JP Morgan to provide €6.8 billion debt facility for ChemChina's purchase of Italian tyre maker Pirelli
China National Chemical Corp's (ChemChina) takeover bid for Italian tyre group Pirelli is being bankrolled by a €6.8 billion ($7.3 billion) bridge loan from JP Morgan, a source familiar with the matter told FinanceAsia on Monday.
State-owned ChemChina said it signed an agreement on Sunday to buy an initial 26.2% stake in Pirelli for €1.8 billion from investment vehicle Camfin. The deal gives Pirelli an enterprise value of €8.3 billion, according to the source, and sets in motion a bidding process that could yet provide China, the world's biggest car manufacturer, with control of the world's fifth-biggest tyre manufacturer.
Camfin is 50% owned by by Russian oil company Rosneft, with the rest held by Pirelli chief executive officer MarcoTronchetti Provera and Italian banks Intesa Sanpaolo and UniCredit. The initial acquisition will be done through China National Tire & Rubber, a subsidiary of ChemChina, and Tronchetti Provera will remain at the helm after the acquisition.
JP Morgan advised China National Tire & Rubber, whilst Rothschild and ChinaChem Finance advised ChinaChem and Lazard advised Camfin.
It is unclear how much JP Morgan will be making on the bridge loan facility, which will be syndicated to other banks. However, banks have increasingly focused on bridge financing, including hedges and interest rate swaps, as a means to make more fees, rather than on just advisory work.
Chinese state-owned enterprises have typically been parsimonious paymasters. According to bankers not involved in the deal, previous large Chinese deals have not yielded huge fees, including the merger of railway companies China CNR and CSR Corp and Citic Pacific's purchase of assets from its parent.
Mandatory offer
ChemChina's acquisition of Camfin's stake is expected to be completed during the summer after antitrust and other relevant approvals, Camfin said in a release.
Following the purchase, there will be a mandatory tender offer for Pirelli’s remaining share capital at €15 per share -- the same price that ChemChina is paying for Camfin's stake -- a premium of about 28% and 18% over Pirelli’s average trading price in the six and three months, respectively, before March 20. 
Under the deal, Camfin will reinvest a portion of the sales proceeds in a newly established Italian joint stock company that will bid for the rest of Pirelli. The company will be controlled by China National Tire & Rubber and Camfin.
Tronchetti Provera, who will stay at the helm of Pirelli in keeping with ChemChina's established practise of retaining local management, will participate in the bid, as well as Rosneft. The latter's stake, though, is expected to fall. 
China National Tire & Rubber will control the bidding company and hold at least 50.1%, while Camfin will take a stake of up to 49.9%.
ChemChina, which has a strong position as an industrial tyre maker in China, has long been looking overseas for acquisitions. Its planned purchase of Pirelli will help it to grow its market share in premium consumer tyres.
Pirelli's sales exceeds €6 billion and its sales network covers more than 160 countries and regions. It is the sole tyre supplier to Formula 1.
According to Camfin's release, Pirelli’s industrial tyre business and certain China National Tire & Rubber assets will be integrated. There are also plans to expand Pirelli’s business in Asia and to seek a de-listing of Pirelli, depending on the outcome of the offer.
Europe is proving to be fertile hunting ground for asset-hungry Chinese firms. In contrast to the US, European countries have welcomed investment from Chinese investors. 
The total value of Chinese acquisitions in Europe announced so far this year is $12 billion, nearly double the $6.9 billion achieved in the same period of last year, according to data provider Dealogic.
Companies such as Fosun International have been picking up assets in Europe, including holiday group Club Med and Portuguese healthcare provider Espirito Santo Saude. 
ChemChina acquired REC Solar, a Norway-based company that makes solar panels for $640 million in 2014.
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