Pirelli is facing a takeover bid from cash rich, China National Chemical Corp in a €7.1 billion deal.

The deal, which got the green light from Pirelli shareholders on Sunday would give state-owned ChemChina access to technology to make premium tyres, which can be sold at higher margins, and give the Italian firm a boost in the huge Chinese market.

It has been reported that ChemChina’s tyre making unit China National Tire & Rubber will first buy the 26.2 per cent that Italian holding company Camfin owns in Pirelli, and will then launch a bid for the rest.

Reports indicate that the bid will be launched by a vehicle controlled by the Chinese state-owned group and part-owned by Camfin investors, who include Pirelli boss, Marco Tronchetti Provera, Italian banks UniCredit and Intesa Sanpaolo, and Russia’s Rosneft,

It has been reported that Pirelli’s truck tyre business could be spun off, or a joint venture with ChemChina’s Aeolus unit could be established.

The offer will be launched at €15 per share, valuing the group at €7.1billion The ChemChina unit also envisages taking Pirelli private.