QUINCY, Ill. (Jan. 30, 2006) — Tire and wheel maker Titan International Inc. could be a private company as soon as the end of February.
Maurice “Morry” Taylor Jr., the company's chairman and CEO, said the sale of Titan to One Equity Partners L.L.C.—a private equity affiliate of JPMorgan Chase & Co.—could be completed by the end of February if final negotiations be-tween a special board of directors committee and One Equity progress as expected.
Due diligence has been completed, and after an agreement is reached, Titan's full board and then the shareholders will have to approve the deal, Mr. Taylor said.
In October, the Quincy-based company announced it had received a cash merger offer from One Equity for $18 per share in Titan common stock. Titan has about 19.5 million shares outstanding, making the transaction worth roughly $350 million.
Jana Partners L.L.C., a hedge fund and Titan's largest shareholder with about 14.8 percent of the common stock, last month expressed doubts via a letter to the Titan board that the $18 per share price was the highest the company could attain in a sale. Mr. Taylor said no one else came through with a better deal, and the offer on the table is a “good deal for everyone.”
The price of Titan shares, which have been traded on the New York Stock Exchange (NYSE) since March 1994, closed at $17.52 on Jan. 18. The price hit $18 on two non-consecutive days last October, but the last time it reached $18 prior to then was June 1998.
In early 2003, Titan's share price fell below $1 and the company was threatened with delisting by the NYSE. The price hasn't been in single digits since November 2004.
After the sale is completed, little will change day-to-day at Titan's tire and wheel operations, Mr. Taylor said, and he will remain the company's top executive. Richard M. Cashin Jr., a company director since 1993, also is the managing partner of One Equity.
Mr. Taylor said at the time of the offer that the deal is a good one for his company because One Equity has some financial muscle. It manages $5 billion worth of private equity investments for JPMorgan Chase, and that would allow Titan to examine some new transaction opportunities within the next year that it couldn't finance otherwise.
Titan, which does the bulk of its business within the agricultural and construction markets, completed its $100 million purchase of Goodyear's North American farm tire business in late December.
However, Titan also entered into a partnership with Rodos Giants L.L.C. last year in an effort to buy Continental Tire North America Inc.'s off-the-road tire plant in Bryan, Ohio, but that deal fell through.
The Goodyear acquisition—which includes a tire plant in Freeport, Ill.—is expected to increase Titan's 2006 sales by about $250 million. The company posted sales of $373.6 million and net earnings of $16.6 million through nine months of 2005. In 2004, Titan reported net income of $11.1 million on sales of $510.6 million.
Mr. Taylor said about a year ago that the firm's good financial outlook made Titan an ideal acquisition target and that 2005 could be its last as a public company.