By Paola Arosio and Stephen Jewkes
MILAN (Reuters) - China National Chemical Corporation
A deal with ChemChina would be the latest Chinese investment to be made in large Italian companies and is expected by analysts to make it Pirelli's single largest shareholder instead of Russian oil giant Rosneft (MM:ROSN).
According to the sources, state-controlled ChemCorp is discussing a strategic alliance with the shareholders of Camfin, the holding company partly owned by Rosneft that owns 26 percent of the Milanese group.
Earlier on Friday Camfin said it was in talks with "an international industrial partner" to sell its stake in Pirelli at a price of 15 euros per share - valuing the tyre group at 7.1 billion euros (5.15 billion pounds).
When the sale of the stake is complete, a takeover offer for the rest of Pirelli would follow, it said.
At 0908 GMT Pirelli shares were up 5.6 percent at 15.75 euros, extending the gains made on Thursday following an Italian newspaper report which said the tyre maker was working on a plan to bring in an Asian investor which could lead to the entire company being taken into private ownership.
Mediobanca analyst Matteo Agrati said in a note he saw the 15 euro figure as "a line in the sand" and that he did not expect other shareholders to tender their shares, hoping instead to benefit from the new investment.
Camfin is currently owned by Rosneft and a holding company of Pirelli's chairman and chief executive, Marco Tronchetti Provera. Other shareholders are Italian banks Intesa Sanpaolo (MI:ISP) and UniCredit (MI:CRDI).
Rosneft, which is also a key shareholder in Italian oil refiner Saras (MI:SRS), bought a 50 percent stake in Camfin a year ago before the onset of the Russian economic crisis.
"We argue the current reference shareholders, with the likely exception of Rosneft, are likely to keep their stakes in the company virtually unchanged," Milan broker Banca Akros said.
Italian companies have been attracting increasing interest from Chinese investors. The People's Bank of China last year bought a stake of a little more than 2 percent in oil major Eni (MI:ENI), insurer Generali (MI:GASI) and carmaker Fiat (MI:FCHA) while State Corporation of China last year bought into Italy's energy grid.
Pirelli has particular attractions for Asian investors because of its relatively small size and its strong profit margins compared with its competitors, bankers said.
The world's fifth-largest tyre maker has managed to boost margins in the past few years even as car sales in Europe fell to historic lows by focussing on more upmarket tyres for premium car makers.
Italian newspapers said on Friday a deal on Pirelli would see the company delisted and its truck tyre business spun off.