Founded in Milan in 1872, Pirelli was one of the few Italian companies that managed to survive the turning of three different centuries. It survived two world wars and the various economic crises that hit Italy, Europe and the rest of the world over the last 150 years.
Like every other respectfully large company, Pirelli also abides by the rule that every large company can only survive if it is managed by very skilful business people. And knowing the story and attitudes of these managers is certainly the best way we can fully comprehend the company in question regarding its essential history and its reasons for success.
Giovanni Battista Pirelli
In all respects Giovanni Battista Pirelli was the father of the company still bearing his name today. Born in 1848 in the province of Lecco, in Varenna, he came from a middle-class family. The father was a baker, and with the proceeds of the family business, he had to keep ten children, five of whom died prematurely.
Giovanni Battista, however, managed to finish his studies, even managing to take a degree in Engineering, which he obtained in 1870 at the Istituto Superiore di Milano (which later became the Politecnico). Pirelli came out as the best in his class, a factor that allowed him to win a scholarship that helped him deepen his research into the field of industrial production.
Only two years later, at the mere age of 24, thanks to a loan from some Milanese banks, he founded GB Pirelli and C., a company for the production of elastic rubber products. It was established in 1872, and would later become the Pirelli we know today.
During his term as president, which ended only with his death (1932), Pirelli managed to direct his creation towards success, thanks to the choices and insights that showed his fundamental foresight, and which we list below:
• 1879: the beginning of production of electrical cables, which enabled the company to become the world leader in the field of telegraphic underwater transmissions and, later, also for high voltage electrical transmissions;
• 1890: launch of bicycle tyre production, which soon after replaced obsolete solid rubber rings;
• 1902: inauguration of the company’s first foreign plant in Spain, to be followed by those of Southampton in 1913, Buenos Aires in 1917, again in Spain in 1924, another in England in 1928 and in Brazil in 1929;
• 1907: Pirelli won a car race with an automobile bearing its name for the first time. This was the Beijing-Paris raid. The car was an Itala (produced from 1907 to 1915), and was driven by Prince Scipione Borghese;
• 1908: From the drawings of sons Piero and Alberto came the image that soon after became the unmistakable company brand: the “Long P” flourishes.
• 1922: Pirelli was first listed on the Milan Stock-Exchange, and in the following year for the first time in New York. It was the first Italian company to achieve such a goal.
As a person, who was attentive to society and business matters, Giovanni Battista was Senator of the Kingdom of Italy from 1909 to 1932, president of what became Confindustria since 1919 and director of AC Milan football team from 1909 to 1928, which his son Piero later took over in the presidency.
From generation to generation: Piero, Alberto and Leopoldo Pirelli
Upon the death of Giovanni Battista, the company landed into the hands of the founder’s two sons, Piero (1881-1956) and Alberto (1882-1971). Both had graduated in Genoa in 1904 and had been members of the company’s steering committee since 1905, alongside their father they became protagonists of Pirelli’s expansion in technological and productive fields for the following thirty years.
The eldest also played an important role in the ascent of AC Milan at a national level, and was chairman for twenty years (1908-1928) and for which he had the San Siro stadium built.
Far more active in the field of business, the brother Alberto proved to be a negotiator for Italy during the Treaty of Versailles following the First World War (1923), and took over from his father at the helm of Confindustria (originally the Fascist Confederation of Industrialists) and despite mixed reports of his relationship with the regime, he publicly criticised Mussolini in 1925 on the subject of restrictions on freedom to opponents of fascism.
Of this latter’s four children only one, Leopoldo (1925-2007), continued the pathway created by his grandfather at the head of the family business. With his degree in mechanical engineering, Leopoldo Pirelli officially joined the company in 1950, and took over the presidency in 1966, holding onto it until 1992.
Like his father and grandfather, he had also held senior positions at Confindustria and always stood up for his commitment to trade unionist’s rights.
The only black spot in Leopold Pirelli‘s career was perhaps his failed takeover bid for the American company, Firestone. This failing destabilised his authority within the company and led to the climb for power by his son-in-law: Marco Tronchetti Provera.
Marco Tronchetti Provera
Upon failing to buy-out Firestone firstly, and then Continental, Leopoldo left the company in the hands of his daughter Cecilia’s then husband, the Milanese entrepreneur Marco Tronchetti Provera.
During the Tronchetti Provera presidency, which dates back to 1995, Pirelli was able to recover from the shock (mainly in share value) of failed takeover bids on competitors, to prove successful on the stock-exchange, becoming a majority shareholder in Telecom Italia.
In 2005, it started its collaboration with China, building its first production facility in the Far East: this is also the first of a series of steps that took the company into Chinese hands within less than a decade. Likewise, under the presidency of Tronchetti Provera, one of the most technologically advanced tyre manufacturing points in the world was opened in Settimo Torinese in 2008.
The following years were ones of the new conception of Pirelli as a market leader in the field of consumer-oriented tyre production, without neglecting the media aspect of its business: since 2011, Pirelli has been the exclusive supplier for racing teams competing in Formula One, whilst since 1995 it has been the sponsor of the Milanese, Inter football team.
In 2015, for seven thousand seven hundred billion dollars, the company was acquired by the Chinese industrialist Ren Jianxin (born in 1958), founder of a small industrial solvents company in 1984 that over a period of twenty years became one of the world’s largest manufacturing companies, known as ChemChina.
Among the most talked about and successful intuitions of the new administration (in which Marco Tronchetti Provera still holds the role of Executive Vice President), was the decision to open a second factory in Mexico, for which Jianxin invested 200 million dollars to spread over a three-year production window.
The new Pirelli and its return on the stock-exchange
The sale of Pirelli and the transferal of power from Marco Tronchetti Provera to Ren Jianxin had led the Milanese company out of the Milan Stock-Exchange.
The massive scoop that has been stirring attention for some time now concerns Pirelli’s return on the stock market, with one of the most interesting IPOs for the 2017 Italian market of all times (read more on the Pirelli IPO here).
The company, in an official press release, announced that it is ready to return on the stock market starting in the third quarter of 2017, following the positive results that had been achieved in its core business, namely the production of retail tyres.
As of yet, the number of shares to be sold is still unknown, but Chinese ChemChina has already said it is ready to reduce its stake in Pirelli to 50% (it currently owns 65%).
It goes without saying that the reference stock-exchange will be that of Milan, which thanks to the merger with the London stock-exchange, has become one of the most important trading points at a European level.
The banks that should support the distribution of shares are IMI of the Intesa Sanpaolo group, and the international JP Morgan and Morgan Stanley, an experienced lender in launching new stock companies.
Finally, a note on the timing: there should be a roadshow in September, with an official launch in October (therefore, the term IPO).
This will be one of juiciest operations, from the stock market’s point of view, for Italy this year. The Pirelli IPO 2017 will keep us glued to the computer screens in the coming weeks/months, searching for news or rumours.
Update Sep ’17
New sources on the IPO: