* Deal values Pirelli at 7.1 bln euros, excluding debt
* Agreement is latest Chinese acquisition in Italy
* ChemChina-controlled firm to bid for Pirelli minorities
* Pirelli truck unit to be merged with ChemChina's AEOLUS (Adds deal milestone, advisers)
By Paola Arosio and Danilo Masoni
MILAN, March 22 (Reuters) - China National Chemical Corp (ChemChina) is to buy Pirelli, the world's fifth-largest tyre maker, in a 7.1 billion euro ($7.7 billion) deal that will place one of the symbols of Italy's manufacturing industry in Chinese hands.
The deal agreed with Pirelli shareholders on Sunday is the latest in a string of takeovers in Italy by cash-rich Chinese buyers, who can take advantage of a weak euro just as signs emerge that Europe is coming out of economic stagnation.
It will give state-owned ChemChina, led by acquisitive chairman Ren Jianxin, 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 marks a return of China's state-owned enterprises (SOEs) to global dealmaking following a hiatus prompted by President Xi Jinping's anti-graft crackdown that targeted several current and former senior SOE officials.
It would be China's fifth-biggest outbound deal by an SOE, according to Thomson Reuters data, and the first major acquisition since China's MMG Ltd 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 percent 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, Camfin said in a statement.
The offer will be launched at 15 euros per share, valuing the group at 7.1 billion euros excluding net debt of almost 1 billion euros 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 and closed at 15.23 euros - 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.
Camfin said on Sunday Pirelli's less profitable truck and industrial tyre business would be folded into ChemChina's listed unit AEOLUS, allowing it to double its output.
The new Chinese owners will pick a new chairman while Tronchetti Provera, who started working in the tyre maker in 1986 after marrying a member of the Italian family that founded the firm, will remain chief executive.
"We're pleased to have this opportunity working with Tronchetti and his team and continue to build together a world-class entity and a market leader in (the) global tyre business," Ren said in a statement.
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.
Rothschild and ChemChina Finance Corp advised ChemChina. J.P. Morgan advised China National Tire & Rubber, while Lazard was the financial adviser to Camfin.
($1 = 0.9221 euros) (Additional reporting by Denny Thomas in HONG KONG and Chen Aizu in BEIJING; Writing by Danilo Masoni and Silvia Aloisi; Editing by Susan Thomas and Ian Geoghegan)
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