THE MERGER PLAN BY ABSORPTION OF MARCO POLO INDUSTRIAL HOLDING INTO PIRELLI APPROVED BY THE RESPECTIVE BOARDS OF DIRECTORS
THE TRANSACTION WILL BE SUBMITTED TO THE EXTRAORDINARY SHAREHOLDERS’ MEETINGS ON 15 FEBRUARY 2016
COMMON EXCHANGE RATIO FOR ALL CLASSES OF SHARES: NO. 6,30 SHARES OF PIRELLI TO BE ALLOCATED FOLLOWING THE MERGER TO THE SOLE SHAREHOLDER OF MARCO POLO INDUSTRIAL HOLDING FOR EACH NO. 1 SHARE OF MARCO POLO INDUSTRIAL HOLDING HELD BEFORE THE MERGER
COMPLETION EXPECTED BY THE FIRST SEMESTER 2016The Boards of Directors of Pirelli & C. S.p.A. and Marco Polo Industrial Holding S.p.A. have approved the merger plan of Marco Polo Industrial Holding into Pirelli. The merger between the companies entails a so called “reverse” merger by absorption of Marco Polo Industrial Holding into Pirelli. It is noted that - in light of the outcome of the mandatory tender offers launched within the framework of the sale and purchase and co-investment agreement executed on 22 March 2015 between China National Chemical Corporation (“ChemChina”) and its subsidiary China National Tire & Rubber Co., Ltd. (“CNRC”), on one side, and Camfin and its shareholders Coinv S.p.A. and Long-Term Investments Luxembourg S.A. (“LTI”), on the other side - Marco Polo Industrial Holding owns, directly or indirectly, 100% of the ordinary shares of Pirelli (that have been delisted on 6 November 2015) and more than 93.2% of the savings shares of Pirelli. On 23 November 2015 the Board of Directors of Pirelli had already resolved to call on 15 February 2016 the Extraordinary Shareholders’ Meeting to approve (i) the mandatory conversion of savings shares into a special class of newly issued non-voting shares not listed on any regulated market (the “Special Shares”), (ii) the adoption of a new By-Laws consequent to the delisting of the ordinary shares and to the Mandatory Conversion, and (iii) the Merger Plan. Method and terms of the transaction Since the Merger between Marco Polo Industrial Holding and Pirelli constitutes a related-party transaction of “major importance” pursuant to the regulations containing the provisions on related-party transactions, the Committee on Related-Party Transactions of Pirelli has been involved and has expressed its favourable opinion regarding the existence of an interest for Pirelli in the execution of the Merger, as well as on the expedience and substantive fairness of the terms and conditions set forth in the said Merger Plan. The information document on major related parties transactions will be published in accordance with applicable laws. As a result of recourse to the financial debt assumed by Marco Polo Industrial Holding to purchase the shares of Pirelli, Art. 2501-bis of the Italian Civil Code applies. Therefore:
- the Merger Plan indicates the financial resources provided for the fulfilment of the obligations of the company resulting from the Merger;
- the report to be issued by KPMG - the common expert subject to the supervision of Consob and appointed on 27 November 2015 by the Court of Milan following the joint petition of Pirelli and Marco Polo Industrial Holding - shall certify, in accordance with applicable laws, the reasonableness of the indications contained in the Merger Plan for the financial resources provided for the fulfilment of the obligations of the company resulting from the Merger;
- Reconta Ernst & Young S.p.A., the auditing firm in charge in auditing the financial statements of Pirelli and Marco Polo Industrial Holding, issued the report attached to the plan;
- Pirelli and Marco Polo Industrial Holding will make available to public, in accordance with applicable laws, the report explaining the reasons justifying the Merger, containing an economic and financial plan indicating the source of the financial resources and a description of the objectives intended to be achieved.
- cancellation of all the shares of Marco Polo Industrial Holding;
- allocation on the basis of the Exchange Ratio to the sole shareholder Marco Polo Industrial Holding of No. 201,823,177 Pirelli ordinary shares and No. 4,677,655 Pirelli savings shares (or, if the Mandatory Conversion has become effective, Special Shares); and
- cancellation of the residual No. 273,565,415 ordinary shares of Pirelli and No. 6,340,587 savings shares of Pirelli (or, if the Mandatory Conversion has become effective, Special Shares) held by Marco Polo Industries Holding, with no reduction of the share capital since Pirelli shares have no par value;
- Marco Polo International Holding Italy S.p.A. (Holdco) will hold, directly or indirectly, No. 202,174,767 ordinary shares, equal to 100% of the share capital represented by ordinary shares and 97,16% of the entire share capital;
- Marco Polo International Holding Italy S.p.A. will hold, directly or indirectly, No. 5,085,997 savings shares (or Special Shares in the event the Mandatory Conversion has become effective), equal to 86,05% of the share capital represented by savings shares (or Special Shares in the event the Mandatory Conversion has become effective) and 2,44% of the entire share capital;
- third party shareholders will hold the remaining No. 824,727 savings shares (or Special Shares in the event the Mandatory Conversion has become effective), equal to 13,95% of the share capital represented by savings shares (or Special Shares in the event the Mandatory Conversion has become effective) and 0,4% of the entire share capital.
- the treasury shares held in portfolio by Pirelli (No. 351,590 ordinary shares and No. 408,342 savings shares or, if the Mandatory Conversion has become effective, Special Shares) will remain unchanged and are included in the stake of Marco Polo International Holding Italy S.p.A.
* * *With reference to the €600 million guaranteed Notes due 2019 issued by Pirelli International plc and guaranteed by Pirelli Tyre S.p.A. (ISIN: XS1139287350) (the “2019 Notes”), please note that the envisaged merger would not constitute a “change of material shareholding” event which would activate the relevant clause and as a consequence would not result in the 2019 Noteholders having the right to request the early repayment of their notes.
* * *All documentation (including the information document on major related parties transactions) will be filed within the terms required by applicable laws and it will remain filed until the approval of the Merger.
* * *Taking the de-listing of ordinary shares into account, the Board of Directors also decided to close the Long Term Incentive Plan 2014-2016 ahead of time. The relative legally required information will be published in the terms and manner required by law.