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August 02, 1999 02:00 AM

COOPER GETS OLIVER IN LATEST PURCHASE: RETREAD EQUIPMENT SUPPLIER COULD HELP AUGMENT TIRE MAKER'S TRUCK TIRE BUSINESS

Chris Collins
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    FINDLAY, Ohio—It is a relatively minor component of the larger deal, but now that Oliver Rubber Co. is destined to become part of Cooper Tire & Rubber Co., there could be a shakeup in the medium truck retreading and commercial tire marketplace. Cooper's pending acquisition of Oliver's parent, Standard Products Co. of Dearborn, Mich., links it with a retread materials and equipment supplier that ranks ``a solid No. 2 in North America,'' Thomas Dattilo, Cooper's president and chief operating officer, said.

    ``I think the Oliver and Cooper merger is very good,'' Patrick W. Rooney, Cooper chairman and CEO, said during a telephone conference call with industry analysts July 27, the day the acquisition was announced.

    ``Oliver has always been attractive to the independent retreader,'' he said. ``Cooper has always been attractive to the independent tire dealer.

    ``So, it's a case where we both have the same objectives as far as marketing our products is concerned.''

    Ronald L. Roudebush, Standard Product's vice chairman and CEO, agreed: ``Our Oliver tire and rubber business and the aftermarket approach to retreading is a direct tie-in to the kind of approach that Cooper has to their tire business.''

    Oliver's sales of $160 million represented about 14.5 percent of Standard's $1.1 billion fiscal 1999 revenue.

    Oliver supplies machinery, molds and tread rubber, both precure and mold cure, to about 250 retreaders. That is about half as many as Bandag Inc., the nation's largest retread equipment and materials supplier.

    During the teleconference, Cooper officials talked a lot about synergy between units of Standard and Cooper.

    ``We have an expansion going on in our medium radial truck tire business,'' Mr. Rooney said. ``So there's no question that womb-to-tomb needs, as far as recapping is concerned, are very important to this aftermarket.''

    About that medium truck tire market, Mr. Rooney said: ``Our forte has been the replacement market through our dealer organization.'' He was noncommittal, however, about whether Cooper, linked with its newly acquired network of Oliver-supplied retreaders, would enter into more comprehensive cradle-to-grave tire management agreements with trucking fleets and other commercial customers.

    ``That doesn't rule out the fact—as we get more and more involved with the expansions we have going on in (our Albany, Ga., factory), plus the Oliver acquisition—that fleet management may not be of interest to us. But, at this point, we have no immediate plans for it,'' Mr. Rooney said.

    A full-fledged tire-management program may not be necessary, Mr. Roudebush said, because ``Oliver already has a very active program with fleets.'' He added that many of Oliver's independent dealers provide this service through a national fleet account program ``that has been growing very steadily over the last few years.''

    While it falls short of being a full cradle-to-grave tire management program, he said it does provide a lot of service through independent dealers.

    Cooper, through its Cooper-Avon Tyres Ltd. subsidiary in Melksham, England, also has an active retread materials program in Europe.

    Mr. Dattilo said Cooper doesn't have any plans to divest itself of Oliver or any of the other Standard Products operating units. ``We have no plans other than to run them and make money for shareholders,'' he said.

    However, Marvin Bozarth, executive director of the International Tire and Rubber Association, raised some questions about the deal.

    ``I guess the only thing I would wonder about is Cooper keeping Oliver,'' he said. ``Oliver doesn't fit well with what Cooper does.''

    Cooper produces products primarily for the ``retail'' (passenger and light truck tire) market whereas Oliver's products are ``95-percent'' commercial in nature, Mr. Bozarth said.

    He believes the acquisition ``might have some impact'' on Cooper's relationship with Hercules Tire & Rubber Co.—a cross-town neighbor in Findlay—and could put Cooper in competition with Hercules in the commercial retread market.

    Cooper manufactures a number of the Hercules-brand tires.

    Officials at both Hercules and Bandag declined to comment on the Cooper-Standard Products deal.

    Mr. Rooney also was asked about rumored links between Cooper and Pirelli in Europe since, in February, Cooper announced an alliance with Pirelli S.p.A. to distribute and market the Italian tire maker's products in North America.

    He declined to answer, saying he didn't want to comment on what he called ``the Pirelli situation.''

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