SYRACUSE, N.Y. (April 21, 2000)—Call it "Carlisle and Titan: The Sequel."
Carlisle Companies Inc. has purchased Titan International Inc.´s original-equipment consumer tire and wheel business, which includes the lawn and garden, all-terrain vehicle and light-duty trailer markets.
The deal does not affect Titan´s aftermarket operations, and dealers should not be affected at all, said Titan President and CEO Maurice Taylor Jr.
Titan´s consumer tire unit recorded sales last year of more than $175 million—with a majority derived from original equipment sales—while Carlisle Tire & Wheel had estimated sales of $250 million to $300 million.
Carlisle put the sales of the portion of Titan´s business it is acquiring at more than $100 million.
The April 17 announcement comes about seven months after a $600 million merger deal between the two companies, in which Carlisle would have wholly controlled Titan, fell through. Carlisle and Titan agreed to that acquisition on Aug. 4, but the 90-day letter of intent was never renewed, and talks between the two firms dried up by early autumn.
But this transaction, valued at about $95 million, is a "done deal" and a good business decision for both companies, Mr. Taylor said.
"Titan and Carlisle have been in talks for quite some time regarding the benefits of combining the small wheel and tire business," Mr. Taylor said. "We finally arrived at a win-win agreement allowing both companies to increase future stockholder value."
In the cash-for-assets transaction, Carlisle has purchased Titan´s Clinton, Tenn., tire plant and Slinger, Wis., wheel factory, and is leasing Titan´s Greenwood, S.C., wheel facility.
Clinton—along with Titan´s Brownsville, Texas, plant—is the company´s main producer of ATV and lawn and garden tires, while the Greenwood facility is the largest wheel producer for those markets.
For Syracuse-based Carlisle, already a market leader in small-to-medium bias-ply off-highway tires and steel wheels, the purchase gives it needed manufacturing capacity, improved wheel-painting technology and expansion into larger tire sizes, the company said.
"This acquisition enhances our ability to serve our customers with the broadest range of products available in our key market segments and expands our market leadership," said Barry Littrell, president of the company´s Carlisle Tire & Wheel subsidiary, which will encompass the former Titan businesses.
"We´re excited about the growth opportunities afforded by their extension of our reach into attractive market niches," he said.
The deal also includes a five-year supply agreement, under which each company will make selected tires for the other. In Clinton, for example, Carlisle will use Titan molds and continue production of some Caterpillar LSW (low sidewall) construction tires, Mr. Taylor said, and distribute them itself.
Quincy, Ill.-based Titan also has licensed Carlisle to use its LSW technology for lawn and garden and ATV wheels and tires in exchange for royalties on LSW-line sales, he said.
Titan will exit the OE markets for lawn and garden equipment and ATVs, but will continue to serve the aftermarket. The company will make some of those tires in Brownsville, and will focus on expanding farm and construction tire operations there, in Des Moines, Iowa, and in Natchez, Miss., Mr. Taylor said.
Dealers who obtain replacement tires from Titan should notice little change as a result of the sale, Mr. Taylor said, except that Titan will be able to offer Carlisle tires as well, broadening its offerings.
Members of United Steelworkers locals in Des Moines and Natchez have been on strike since 1998. John Peno, president of USWA Local 164 in Des Moines, called the announcement "great news for Titan workers at the affected operations."
"Assuming the deal actually goes through this time|.|.|.|they will finally be out from under Mr. Taylor and his mismanagement," Peno said.
He said Mr. Taylor has become desperate as the company´s financial results have declined the past two years, and as a result is selling off Titan´s "only remaining productive tire factory and a sister wheel plant." Titan has been operating with replacement workers in Des Moines and Natchez.
But Mr. Taylor said those two plants are "cranking up" and looks at the Carlisle deal as nothing but positive.
Titan, which employs about 5,000 worldwide, posted corporate sales of $588 million in 1999, with losses of $11.4 million.
Carlisle, which employs about 9,500 worldwide, had record sales of $1.61 billion and earnings of $95.8 million in 1999.