PRAGUE, Czech Republic (Aug. 27, 2008) — GPX International Tire Corp. has agreed to sell its Rumaguma A.D. agricultural/industrial tire plant in Ruma, Serbia, and rights to the Galaxy brand in Central and Eastern Europe to CGS Group of Czech Republic, which will operate it under its Mitas A.S. business unit.
Terms of the deal, expected to close before the end of September, were not disclosed. CGS, which controls the Continental brand in agricultural tires, said the acquistion will strengthen its position as the No. 2 agricultural tire maker in Europe.
CGS said it intends to transfer bias-ply capacity from its existing Czech plants to Rumaguma as part of an ongoing radialization project, enabling Mitas to optimize production programs among its plants and continue supplying the still important bias-ply agricultural and industrial tire markets from a cost-effective manufacturing site.
The company eventually will add radial capacity at Rumaguma once the Czech plants are converted.
CGS said it is prepared to continue supplying GPX with selected tires under an off-take agreement for a certain, undisclosed period of time and to explore further possibilities for mutual cooperation in various other fields.
The firm did not quantify the potential financial impact of adding the Galaxy brand to its distribution efforts in Eastern and Central Europe.
CGS—the 36th largest tire maker worldwide with $382 million in sales last year—operates three plants in Czech Republic. It acquired Conti's agricultural tire business in 2004 and integrated it into its own plants.
CGS sells tires in North America through its CGS Tires U.S. Inc. subsidiary in Charlotte, N.C.
GPX predecessor Galaxy Tire & Wheel Inc. bought Rumaguma in 2003, giving the Malden, Mass.-based off-the-road tire marketer its first captive manufacturing. Prior to that Rumaguma made tires for Galaxy under contract. Since then GPX has added tire factories in Gorham, Maine, and Hebei, China, and recently closed an industrial tire plant in Mississauga, Ontario.