China National Chemical Corp is to buy Pirelli, the world's fifth-largest tyre maker, in a €7.1 billion deal that will place one of the symbols of Italy's manufacturing industry in Chinese hands. 

The deal agreed with Pirelli shareholders yesterday is the latest in a string of takeovers in Italy by cash-rich Chinese buyers. 

They are taking advantage of a weak euro just as signs emerge that Europe is coming out of economic stagnation. 

The deal will 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. 

The bid for Pirelli would be China's fifth-biggest outbound deal by state-owned enterprises, according to Thomson Reuters data.

It is the first major acquisition since China's MMG led a consortium last year to buy the huge Las Bambas copper mine in Peru from Glencore. 

ChemChina's tyre making unit China National Tire & Rubber will first buy the 26.2% that Italian holding firm Camfin owns in Pirelli, and will then launch a mandatory takeover bid for the rest.

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.

The offer will be launched at €15 per share, valuing the group at €7.1 billion excluding net debt of almost €1 billion at the end of 2014.

The ChemChina unit also envisages taking Pirelli private. 

As details of the deal were leaked on Friday, shares in Milan-listed Pirelli, which started business 143 years ago producing rubber items, rose to a 25-year high - a sign that traders predict an improved offer or a rival bid. 

Sources close to the matter said on Friday the deal with the Chinese group will mean Rosneft, which is facing international sanctions due to the Ukraine crisis and needs to cut debt, reduces its stake in Pirelli. 

The agreement would give Beijing-based ChemChina access to technology used in making lucrative premium tyres and could help China, already a global player in sectors such as telecoms and internet, develop its automotive industry. 

In turn Pirelli, whose tyres equip cars in Formula One motor racing, would have more bandwidth to compete against larger rivals such as Michelin and Continental which are looking for growth in Asia. 

Previous Chinese acquisitions in Italy, the euro zone's third-largest economy, include stakes in power grid firms Terna and Snam, turbine maker Ansaldo and luxury yacht maker Ferretti. 

Excluding the financial sector, Italy is the second-biggest acquisition market for China in Europe and fifth-largest worldwide, with 10 deals completed since the start of 2014, according to Thomson Reuters data.