Yokohama Rubber to buy Alliance Tire Group for $1.2 bn
26 March 2016
Japanese tyre company Yokohama Rubber Co Ltd yesterday struck a deal to buy Alliance Tire Group B.V. (ATG) from private equity firm KKR & Co and others for about $1.2 billion as part of its plans to expand its commercial tire business.
KKR had acquired a controlling stake in the Netherlands-based ATG in 2013 from peer Warburg Pincus for a reported $500 million.
The proposed acquisition requires regulatory approvals and is expected to close by 1 July 2016.
Amsterdam-based ATG was founded in 2006 and has annual sales of $529 million.
ATG has developed a highly specialised business in the manufacture and sale of tires for agricultural, industrial, construction and forestry machinery. It sells radial and bias tyres in 120 countries around the world, with a focus on the North American and European markets.
Yokohama Rubber does not currently manufacture or sell tires for agricultural or forestry machinery and the proposed acquisition will strengthen Yokohama Rubber's product lineup in commercial tires.
Agricultural equipment tire demand is expected to increase as a result of the growing use of agricultural machinery, which is crucial to improve agricultural efficiency to meet the increasing food needs for the world's growing population, Yokohama Rubber said in a statement.
Yokohama Rubber is currently in Phase IV of its Grand Design 100 medium-term management plan, which envisages the expansion of the business in commercial tires as a new core pillar of its tyre business strategy and is thus developing and expanding sales of ultra-large radial tires for mining and construction equipment.
Yokohama Rubber recently started production of truck and bus tires at a new plant in the US state of Mississippi, and the ATG acquisition will strengthen the company's business in commercial tyres and accelerate its ongoing globalisation.
Yokohama Rubber was founded in 1917 as a joint venture between Yokohama Electric Cable Manufacturing Company (today known as Furukawa Electric Co.) and the B.F. Goodrich Company.
The company's North American manufacturing facility is located in Virginia, where most its tyres sold in the US are produced.
It posted net income of $493 million in 2014 on revenues of $5.2 billion.