Pirelli's largest shareholder Camfin on said Sunday that it had signed a deal with ChemChina under which the state-owned chemical giant will buy into the world's fifth-biggest tyre manufacturer in a €7.4 billion ($8.07 billion) deal.
It calls for ChemChina to eventually hold a controlling stake of at least 50.1 percent of the company renowned for its Formula One equipment and racy calendars.
Under the proposed terms, the company's headquarters and research centre would remain in Italy with current CEO Marco Tronchetti still in charge. Pirelli would eventually be split into two companies, one dedicated to high-end tyres, the other to industrial ones.
Tronchetti told employees in an internal note on Monday that the takeover was "a growth process which will take time, but in which I strongly believe and will engage in as both manager and shareholder."
ChemChina's bid "will allow us to take our growth strategy further with greater vigour," he said.
His optimism failed to rub off on Italy's main business leaders, most of whom appeared to accept that the eurozone's third largest economy, gasping for investment after the economic crisis, had little choice but to put up and shut up.
"Yesterday, one of the rare big Italian businesses changed owner," former centre-left premier Romani Prodi said.
"Today, industrial policy is made in Beijing.... (but) we're happy because before this even the Chinese didn't come to invest in the country," he said, calling on Italy to snap out of it and recover its own "strategic industrial policy."
The bitter pill for Italy, which has struggled to kick-start growth, comes just weeks after the announcement that Qatar's sovereign fund is to become sole owner of a prime area of real estate in the northern city of Milan.
Pirelli is a flagship company for the Italian economic capital, where it began business in 1872 by making bicycle wheels before moving into the nascent car industry.
Now a mainstay of the Formula One racing circuit, the company is equally well known for its calendars that have featured stars from Sophia Loren and Brigitte Bardot toi Penelope Cruz.
While Prime Minister Matteo Renzi did not comment on the ChemChina deal, Labor Minister Giuliano Poletti applauded Pirelli for being open to change and drawing in much-needed foreign funds.
"If there are Italian investors, great... (but) if there aren't, rather than businesses which slowly, for lack of investment, end up ageing and closing up shop, we need to retain vitality and do so by having an idea," he said.
"It seems Pirelli has done so, keeping its head in this country with a strong national presence. Our country needs international investments," he added.
But Gian Maria Gros Pietro, chairman of the management board of Intesa Sanpaolo bank - an indirect shareholder in Pirelli - was less impressed, saying the deal was "not ideal, but where in Italy will we find someone to challenge this takeover?"
La Repubblica daily also wondered if things "could have been done differently?"
The deal is "the result of globalisation and the impossibility for a family to retain control over a group worth over €7.0 billion, in spite of the support of the country's main banks," it said.
Cesare Romiti, former executive of companies including Fiat and Alitalia, said he was "sure there will be benefits" but spoke of "great bitterness" at the takeover, warning that "taking entire industries away is dangerous for Italy."
"Italy is losing another company due to a lack of government policy which must aim to keep businesses here," he said.