MOSCOW (July 26, 2006) — Amtel-Vredestein N.V. has agreed to acquire Moscow Tyre Plant (MTP) through its Russian subsidiary Amtel-Vredestein OJSC, subject to approval from the Russian State Anti-Monopoly Committee.
The Dutch-Russian tire group, the fourth largest in Europe, aims to take control of the 60-year-old company on Aug. 1 and bring the facility to full capacity of 2.2 million tires per year, from about 30 percent currently, as soon as possible.
Amtel-Vredestein said it expects Moscow Tyre to generate sales of $66 million to $88 million a year at full capacity.
While final terms of the deal have not yet been finalized, Amtel-Vredestein said it expected to take on debt to finance the acquisition.
“By acquiring Moscow Tyre Plant, we will gain essential production capacity to meet the growing demand for our brands in Russia,” Amtel-Vredestein CEO Alexei Gurin said.
The MTP plant in Dubrovskaya, which produces the popular Taganka tire brand, was modernized in 2004 and 2005 through a $40 million joint venture with Germany's Continental A.G., which since has been dissolved.
“Amtel-Vredestein will reduce the overall footprint of the plant to retain just the smaller, more modern facility—a significant cost saving measure that will optimize production and minimize costs for power, maintenance, payroll, etc.,” the company said in a statement.
The older premises will be managed by Amtel-Vredestein until December 2007, after which time the Moscow municipal government will take control and redevelop the site.
Amtel-Vredestein also agreed with the Moscow government to shut down the rubber mixing facility at MTP in 2007 for environmental reasons and ship pre-mixed compounds from its existing tire factory in Voronezh, Russia.
The tire maker said it had not yet made a decision on whether it would continue to produce MTP's brands.