Tyremaker Pirelli denies short-seller report alleging Russian ties
Pirelli Responds to Grizzly Research Allegations
By Enrico Sciacovelli
June 4 (Reuters) - Italian tyremaker Pirelli rejected on Thursday a report by U.S.-based short-seller Grizzly Research, in which it questioned whether the tyremaker was making more money from Russian operations than it was disclosing.
Short-Seller's Claims and Position
The hedge fund said in a report published on its website it has taken a short position in Pirelli, suspecting growth in the Russian business may be driven by demand from the Russian invasion of Ukraine.
Russian filings obtained by the short-seller imply around 10% of Pirelli's net profit comes from operations in the country, Grizzly Research said in its report.
Pirelli's Official Response
"The content of the note from Grizzly Research does not reflect the truth," Pirelli said in a statement, adding it does not produce tyres intended for military use.
The tyremaker added that it had asked its legal representatives "to take action in all jurisdictions against those who have spread this false information."
Revenue Attribution and Company Data
As of March 31, Pirelli attributed less than 6% of its revenue to Russia, Middle East, Africa and India combined, according to the company's quarterly report published in May.
Further Allegations and Market Impact
Grizzly Research claimed a tyre center located in an occupied part of Ukraine was supplying Russian forces fighting in the country, with Pirelli's employees aware of the buyer's identity and aims.
"We are concerned that Pirelli’s relationship with the Russian state may pose security risks for the West," the short-seller said, adding that Russia could gain access to critical technology.
At the market open in Milan, the stock fell by as much as 13.4%, hitting a one-year low, before paring its losses to 1.6% after the company statement.
Pirelli's Actions Since Russia's Invasion of Ukraine
In March 2022, following Russia's invasion of Ukraine, Pirelli said it had halted investments in Russia, aiming to limit activities in local factories to those needed to guarantee the financing of salaries and social services for employees.
(Reporting by Enrico Sciacovelli, Mihika Sharma in Bengaluru, additional reporting by Giulio Piovaccari, edited by Keith Weir)
