Pirelli, the Italian tire manufacturer, announced it has instructed lawyers to take legal action against Grizzly Research following the publication of a report alleging the company maintains a 'close relationship' with Russia that could threaten Western national security [1]. Grizzly Research, a short seller, claimed that Pirelli derives more profits from its Russian operations than it publicly discloses, citing a disparity between Pirelli's reported earnings and figures found in Russian filings [1]. Specifically, Grizzly asserted that Russian filings imply 10% of Pirelli's net profits originate from Russia, in contrast to Pirelli's statement that only 6% of its revenues come from Russia, the Middle East, Africa, and India combined [1].
The report further alleged that a tire center in occupied Ukraine listed on Pirelli's website serves the Russian military, and that Pirelli employees knowingly facilitated tire sales for Russian forces fighting in Ukraine by sharing contact details for orders [1]. Grizzly also claimed that Pirelli's Kirov factory operates within an industrial complex alongside a Russian state-owned tire producer controlled by a military research institute, which purportedly holds a 25% stake in much of Pirelli's Russian business. Another minority shareholder, with a 9.99% stake, is said to have close ties to the same institute [1].
In response, Pirelli labeled the information as 'false' and stated it would 'take action in all jurisdictions against those who have spread this false information' to protect its shareholders and reputation [1]. The company previously announced it would halt further investment in Russia following Moscow's invasion of Ukraine in 2022 [1].
Market reaction was immediate, with Pirelli shares initially falling after the report's release before rebounding later in the day [1]. Grizzly Research has previously made similar allegations against other companies regarding Russian links [1].
CONCLUSION
Pirelli faces serious allegations from Grizzly Research regarding its Russian operations and potential security risks, which the company strongly denies and is addressing through legal action. The market initially reacted negatively to the report, but Pirelli's shares recovered, reflecting ongoing uncertainty. The outcome of Pirelli's legal response and any further disclosures will be closely watched by investors.