Continental A.G. has agreed to sell its agricultural tire business unit to CGS Group of Czech Republic, the maker of Mitas-brand farm, industrial and motorcycle tires.
Financial terms of the deal were not disclosed, but Conti said the business unit is profitable.
CGS Group, which also includes Rubena industrial rubber products and Buzuluk rubber processing machinery, will integrate Conti's ag tire unit into its own tire division, which operates plants in Prague and Zlin, Czech Republic.
Continental said it views this to be a good opportunity for the unit to attain a better position internationally, since CGS is working on developing its areas of industrial, agricultural and motorcycle tires. At the same time, Continental said this reflects its strategy of leaving business sectors that it does not consider core.
The deal is expected to close this fall, Conti said.
The tire maker said its farm tire business generates more than $110 million in sales annually, principally in Europe.
Conti said the deal will have no effect on the availability of product for dealers in North America, where its Continental Tire North America Inc. unit has sold Conti-brand farm tires since 1999 after phasing out the bias-ply General tire line three years earlier.
Conti and CGS have concluded agreements governing the use by CGS of the Continental, Semperit, Barum and Euzkadi trademarks. Conti also markets Uniroyal-brand farm tires in Europe.
During the transition, Conti will assist in several areas to ensure continuity in the variety of services provided to customers. Conti said it has been cooperating with CGS for some time but didn't specify what that entailed.
Continental makes agricultural tires at its plant in Otrokovice, Czech Republic, where it consolidated farm tire production in 2000. Production will continue there under CGS' direction, and Conti also is looking at making farm tires in Malaysia at one of its Continental Sime Tyre joint venture plants.
Otrokovice is Conti's principal site for its Barum-brand tire line.
CGS stands for CeskÃ¡ GumÃ¡renskÃ¡ Spolenost. The Prague-based firm had sales of farm, industrial and construction tires of $75.5 million in 2002.
Conti has been looking at options for its farm tire business for some time. Last summer Swedish agricultural tire maker Trelleborg A.B. said it was talking to Conti about cooperation in the ag tire business.