Pirelli and Aeolus Tyre: letter of intent for jv in China
PIRELLI AND AEOLUS TYRE SIGNED LETTER OF INTENT FOR JOINT VENTURE IN CHINA
IN 2005 MANUFACTURING OF PIRELLI TYRES WILL START IN HENAN PROVINCE
EXPECTED NEW INVESTMENTS FOR MORE THAN 150 MILLION EUROS IN THE NEXT THREE YEARS
Milan, 12 November 2004 - Pirelli and Aeolus Tyre Co. Ltd., a public company listed at the Shanghai Stock Exchange and one of the main tyre manufacturers in China, signed a Letter of Intent to set up - in first half 2005 - a Joint Venture in the Henan Province.
The new Joint Venture plans to start in 2005 the production of truck radial tyres, mainly for Chinese domestic consumption and for export to other countries of South East Asia . In addition, a new plant for the production of Car radial tyres and, after these, a plant for the production of steelcord, an important component in the manufacturing of radial tires, will be set up. The Joint Venture will, therefore, manage three productions sites in the area.
The overall investment planned for the next three years amounts to more than 150 million Euros and, as a result, the new Joint Venture will rapidly become one of the major radial tyre manufacturing companies in the country. Thanks to this Joint Venture, Pirelli will also increase by approximately 33% its current worldwide production of truck tyres (+50% of "all steel" truck tyres): the new plant will in fact join existing ones in Italy, Turkey, Egypt and Brazil.
China is the fastest growing tyre market in the world: in the first half of 2004 alone, the production of radial tyres increased by 28.5% with respect to the same period of last year, with a total output of over 38 million pcs., representing more than 60% of the overall domestic tyre production.
"We have identified in Aeolus Tyre a high profile partner with all the necessary qualities to succeed in this joint venture", declared Mr. Francesco Gori, General Manager of Pirelli Tyres Sector, "Pirelli is a technology leader in radial tyres worldwide and we intend to be among the key players at this time of strong growth of the radial tyre business in China.".
"We believe that Pirelli is the best possible foreign partner, either in terms of technology and international experience and in terms of brand recognition on the Chinese market. Pirelli is a world known company with a long tradition and respectful understanding of specific cultural attitudes and local requirements", added Mr. Cao Chaoyang, Chairman of Aeolus Tyre Co. Ltd. "We are confident that this partnership will offer us the opportunity to meet the increasing demand for radial tyres in China, as a result of the rapid growth of the automotive sector. Pirelli and Aeolus will therefore give an important support to modernize our country".
This transaction is subject to the approval of the competent Chinese Authorities. Pirelli is advised by HSBC.
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