Goodbye GPX International Tire Corp. Hello Alliance Tire Group and Maine Industrial Tire and welcome back Dynamic Tire.
International tire distributor GPX International—established in 2005 in a merger of Galaxy Tire Corp. and Canada's Dynamic Tire in Chapter 11 bankruptcy protection since Oct. 26—was parceled into three entities Dec. 7 at an auction at the U.S. Bankruptcy Court for the District of Massachusetts in Boston.
The biggest chunk of GPX's business, involving the Galaxy and Primex brands, U.S. and South African physical assets, customer accounts, etc., went to Israel's Alliance Tire, which prevailed at the auction with a $54 million offer, outbidding Titan International Inc.
GPX's manufacturing assets—comprising tire plants in Gorham, Maine, and Hebei, China, a wheel plant in Red Lion, Pa., and rights to the Maine Tire, MITL, ITL and Brawler brand names—went for $11 million to an investors group led by GPX executives, who intend to operate the business under the Maine Industrial Tire L.L.C. name.
The third deal, for GPX's Canadian distribution assets, involves GPX/Dynamic Tire executives Robert Sherkin and Peter Koszo, who bid $23.9 million for the business, which largely echoes the Dynamic Tire that Mr. Sherkin put into the GPX merger nine years ago.
GPX filed for Chapter 11 bankruptcy protection Oct. 26 after suffering losses in fiscal 2007 and 2008 and seeing a considerable portion of its business disappear after the U.S. imposed double-digit duties on OTR tires GPX was sourcing from China.
“This acquisition is an exceptional step forward for Alliance Tire Group,” said Alliance Tire CEO Yogesh Mahansaria. “This transaction reinforces Alliance's position as a key leader in the agriculture, industrial and OTR tire industry. We are fully confident that the synergy between the Alliance, Galaxy and Primex brands will enable us to provide optimized solutions to the market.”
The acquisition expands Alliance's broadening line of agricultural, OTR, construction and forestry tires, said Manny Cicero, president of Alliance Tire Co. USA Ltd.
“If you look at everything Alliance has been building in North America and around the world, this purchase is an excellent fit,” Mr. Cicero said.
“Alliance has spent the last three years growing significantly in the face of a worldwide shortage of large tires and a global recession. Acquiring GPX's pneumatic assets is part of our aggressive growth plan to deliver a broad product line of high-quality tires to our customers here in North America and around the world.”
The deal includes GPX's exclusive North American distribution agreement with China's Aeolus Tyre Co. Ltd. for the Aeolus truck tire brand, adding that revenue stream to Alliance's portfolio, Mr. Cicero said.
Alliance also will be taking over warehouse distribution centers in Memphis, Tenn., and Houston.
Alliance Tire is the Denville, N.J.-based subsidiary of Israel's Alliance Tire Co. (1992) Ltd., a maker of farm, forestry and OTR tires with plants in Israel and India. These together with ATC Tires Pvt. Ltd. in India make up Alliance Tire Group.
Mr. Mahansaria said the acquisition allows Alliance to optimize its production.
“We've invested $100 million in a new, state-of-the-art factory in India and have honed our Israel production facility to high efficiency,” he said. “With our own plants and the supplier relationships built by GPX, we have dramatically expanded our global network and given ourselves the opportunity to put each mold in the production facility that will produce the best value and quality for our customers.”
Alliance will evaluate the feasibility of using its new plant in India to make some of the Galaxy and Primex tire lines, Mr. Cicero said.
Alliance's final bid was 42 percent above its initial offer.
Titan entered the picture Dec. 2 with a $44 million offer that trumped Alliance's original offer of $38.3 million. Titan CEO Maurice Taylor Jr. went as high as $49 million before Judge Joan Feeney called for a final round of sealed bids.
Mr. Taylor said $49 million was as high as he was willing to go for the assets being offered. For him, the deal boiled down to two basic criteria: acquiring molds for some sizes and lines Titan doesn't offer and taking a competitor out of the marketplace.
“I originally looked at buying all three businesses,” Mr. Taylor said, “but there were some things in the other deals I didn't like so I bid only for the one business.”
Mr. Taylor described the auction as a high-stakes poker game, with the bidding going back and forth several times.
“I wish them luck with it,” he said. “I think they overspent for what they're getting, which is good for us since they won't have much left over to spend on other activities.”
Alliance was the 54th largest tire maker in the world in 2008 with sales of $226 million, according to Tire Business' Global Tire Report. GPX was 36th with sales of $553 million, but only a portion of this will accrue to Alliance's ledger, since the OTR tire manufacturing and Canadian distribution assets are being sold separately.
The manufacturing assets are now owned by MITL Acquisition Corp. L.L.C., an investment group led by GPX executives and shareholders Bryan, Neil and David Ganz.
Bryan Ganz, co-chairman of GPX, will be CEO of the new company, which is being renamed Maine Industrial Tire. Troy Kline will be president and chief operating officer and Phil Fitzgerald director of China operations.
Maine Industrial Tire has about 700 employees in its various production and distribution facilities. It will continue to be based in Malden, Mass.
This business generated North American sales of $66 million in 2007 and 2008 and is projected to produce $45 million this year, according to court filings.
The new owners have yet to comment on their plans for the business, although court documents show the deals include provisions for MITL to make tires for Alliance and for the new owners of Dynamic Tire.
Brampton, Ontario-based Dynamic Tire will become a separate entity engaged in the sale and distribution in Canada of Galaxy- and Primex-brand OTR tires, the sale and distribution of medium radial truck and passenger car tires, and private label sourcing, GPX said.
Dynamic operates six sales/distribution offices in Canada, three in Ontario and one each in Alberta, New Brunswick and Quebec, according to the firm's Web site.
“The court's approval of these transactions is an excellent outcome for the company and its customers, vendors and employees,” said GPX CEO Craig Steinke. “We are excited to work with the three acquirers to close the transactions prior to the end of the year. In doing so, we will enable the continuation of quality and innovation inherent in GPX's brands while providing employment for over 95 percent of GPX's work force.”
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