New Delhi: Apollo Tyres Ltd will acquire the $200 million Dunlop Tyres International (Pty) Ltd (Dunlop South Africa) in an all cash deal for 100 per cent equity worth about Rs 290 crore ($62 million). Dunlop South Africa is an unlisted company, privately-owned by financial investors and management.

The transaction is subject to regulatory approvals in both countries, including that of the South African Competition Commission, and contractual and other conditions precedent to the closing of the transaction. The South African company  has its headquarters at Durban and owns subsidiaries in Zimbabwe and the United Kingdom.

Speaking on the acquisition, Onkar S Kanwar, chairman and managing director, Apollo Tyres Ltd, said: "We have been in close contact with the Dunlop management for some time and have been very impressed with their range of products and the professional manner in which the company is managed. Their commitment and desire to be a technology-driven force in the international markets is apparent from Dunlop's people, factories and distribution network. This acquisition opens up new avenues for Apollo Tyres. We will add value to Dunlop South Africa, and the combined entity will become an even stronger force to reckon with in the coming years."

The acquisition of Dunlop South Africa will make Apollo Tyres Ltd the undisputed number one Indian tyre manufacturer in terms of size, reach, technology and range of products. It is also the first Indian tyre company to undertake an acquisition abroad. In terms of global ranking in the tyre industry, Apollo Tyres is expected to rank 13th or 14th in terms of size.

Apollo Tyres, currently ranked 16th globally, has four manufacturing locations across the country, and Dunlop South Africa is ranked 39th and holds the world record for the fastest land speed for a standard production tyre at 388.5 km/hr in 2002.

The acquisition is Apollo's first entry in the global arena and the company expects it to be a springboard to position Apollo Tyres Ltd as a global player, and a base for future growth initiatives. Dunlop Tyres International (Pty) Ltd's three manufacturing units in South Africa and Zimbabwe produce the entire range of bias and radial products - from high-end truck and bus tyres to industrial, farm, light truck, off-road and mining tyres, high-speed passenger car radials and ultra high performance car tyres.

Apart from tyres made under the globally recognised Dunlop brand, it is also the manufacturer of high-value brands like Regal and India; has exports to Europe, Central Asia, Australia and South America and has contract manufacturing with key international players. In addition, Dunlop SA is the sole distributor of Cooper Tyres in Southern Africa.

Like Apollo's exclusive dealerships, Apollo Tyre World, Apollo Radial World, and Apollo Pragati Kendra, Dunlop SA has over 230 exclusive multi-brand dealerships called Dunlop Accredited Distributors or DAD across South Africa and Zimbabwe.

Through the acquisition, Apollo will also gain a substantial shareholding in National Tyre Services (NTS), Zimbabwe - a major tyre distributor and re-treading company. NTS has a technology tie-up with Bandag, the world-wide leader in the field of re-treading technology

Kanwar added, "The synergies between our two companies will add enormous value. Post this acquisition, Dunlop's know-how will further boost Apollo's R&D and market reach, enabling us to maintain our technology-driven product and market leadership in all the key segments of the tyre market and open up further global opportunities." The current management will continue to run the operations at Dunlop Tyres International (Pty) Ltd with appropriate support from Apollo personnel, in accordance to an agreed integration plan jointly finalised by the managements of the two companies.

The financial and legal advisors to Apollo Tyres Ltd for this transaction were JM Morgan Stanley and Amarchand & Mangaldas, respectively.

Meanwhile, the board of directors of the Apollo Tyres have approved the elevation of Neeraj RS Kanwar, chief operating officer, to joint managing director.

For the quarter ended December 31, 2005, Apollo's net sales rose 19 per cent at Rs 678.8 crore, compared to Rs 571 crore in the same quarter last year and operating profit increased to Rs 54.2 crore against Rs 47.2 crore in the third quarter of 2004-05. However, net profit declined minimally at Rs 16.4 crore in Q3 2005-06 against Rs 16.8 in Q3 2004-05.