FINDLAY, Ohio—``Who'da thought some day we'd see James Bond, OO7, driving an Aston-Martin with Cooper-produced tires on it!'' commented Alec Reinhardt, Cooper Tire & Rubber Co. executive vice president, during a press conference announcing his company's agreement to acquire England's Avon Tyres Ltd. Who'da thought, indeed. Cooper Tire, the world's ninth-largest tire manufacturer, whose products compete with the associate brands of the Big Three in the replacement market, is now poised to become a global player—and with a little added prestige, since Avon supplies original equipment tires for Aston-Martin and Rolls Royce: luxury vehicles rarely, if ever, seen in Cooper's small hometown of Findlay.
Cooper announced Feb. 18 that it had entered into an agreement with Avon Rubber p.l.c. of the United Kingdom to buy its tire operations for $110.4 million. The purchase, which had been negotiated over a period of 18 months, includes all the shares of Avon Tyres and Avon Technical Services; Avon's tire manufacturing facility in Melksham, England; three distribution companies—in France, Germany and Switzerland; and the worldwide right to use the Avon name on tires, inner tubes and retreading materials.
Avon Rubber, founded in 1885, said it was divesting its tire division to concentrate on its core business of engineered products.
``This is an exciting and logical global extension of Cooper's manufacturing and marketing presence,'' said Cooper Chairman Patrick Rooney. ``We are currently selling products in over 100 countries throughout the world, but this is our initial step toward expanding our tire manufacturing operations outside the U.S. to supply the world market.''
Avon Tyres reported sales in fiscal 1996 of $168.8 million and after-tax income of $6.5 million. Cooper generated $107.9 million in net income on sales of $1.6 billion last year.
Cooper and Avon have had a long relationship, which included sharing production technology, and the buyout will only be an extension of things the two manufacturers have been doing all along, according to Al Smoke, president of Avon International U.S.A., the division that handles the distribution of Avon tires in the U.S. and the Caribbean.
Mr. Smoke believes the pending acquisition won't change things for the 40 Avon distributors in the U.S. and their dealers for a while.
Mr. Rooney concurred. Cooper currently is focusing its attention on expanding in the European market and has not made definitive plans for increasing Avon's minor presence in the U.S., according to Mr. Rooney, who discussed the acquisition with reporters and analysts Feb. 19.
There are ``contractual agreements'' with Avon International to distribute Avon tires in North America, and the Melksham plant has limited production capacity. ``If we determine to build the Avon name in the U.S., we would need to increase production in the U.S.,'' Mr. Rooney said. He left open the possibility of eventually incorporating Avon into the Cooper distribution program stateside.
Meanwhile, the acquisition, expected to be completed in late March, will provide Cooper with its first overseas production facility; Cooper has four tire plants in the U.S. The purchase also provides Cooper with an established European distribution network that includes distribution operations in France, Germany and Switzerland; and a package of technical agreements Avon has with tire manufacturers in Malaysia, Indonesia, Pakistan, Iran and Sri Lanka.
About 8-9 percent of Cooper's revenues comes from export sales and, of that, 30 percent is sales in Europe. Mr. Rooney sees the Avon-Cooper partnership as a good fit for both companies. ``Avon produces sizes required in Europe that we do not; it gives us entree into a new business. Plus it enhances offerings we currently supply in the Cooper and Mastercraft lines. This enhances our marketing efforts in the European theater.''
Mr. Rooney added: ``One of the key areas that makes this (deal) very attractive to us is that Avon is very instrumental in technical assistance to other parts of the world. Cooper has never been involved in this. It is something we have no expertise in. As we become global, it is necessary that we have this capability to enhance our position around the world.''
Cooper and Avon are expected to exchange technologies and processes to enhance both product lines. ``Avon is recognized as a producer of quality products, especially at the high end,'' Mr. Rooney said. ``There have been comments made that Cooper has a presence in the middle road. . . . With Avon on the scene, it gives us added capability—and a high-performance image that we are striving to get.''
Cooper dealers in the U.S. will not see the tires suddenly revolutionized, Mr. Rooney noted. ``We will have evolutionary change in some of our products rather than revolutionary.'' But that won't happen for some time. ``We'll see technology brought into the production operation (in the U.S.) on a gradual basis,'' he said.
Cooper also said it has no reorganization or restructuring plans that would impact general operations or overall employment at Avon Tyres. The Avon operation will report to Bill Klein, Cooper's vice president of operations, who will work with Rod Pottow, Avon's managing director.
Cooper is financing the transaction through the addition of long-term debt, and no equity issues will be involved, the company said. At the close of last year, Cooper's long-term debt stood at $69.5 million.
``Based on the anticipated profitability of the acquired operations, Cooper does not foresee, from the date of acquisition, any dilution of Cooper net income,'' the company said in a statement.