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September 24, 2012 02:00 AM

Titan to issue shares to cover Titan Europe offer

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    Titan International Inc. has confirmed its earlier proposed offer to buy Titan Europe P.L.C.— one share of Titan International stock for 11 shares of Titan Europe stock—and is proposing issuing up to 6.24 million new shares to cover the offer, according to a prospectus filed by the Quincy-based tire and wheel company.

    The offer values the deal at approximately $168 million and represents a premium of about 15 percent over the closing price of Titan Europe's shares on Sept. 13, Titan International said. Each Titan Europe share would be worth $1.81, Titan International said.

    Titan Europe shareholders have until 1 p.m. London time Oct. 5 to accept the offer, according to the prospectus.

    Titan International's bid covers the 78.3 percent of Titan Europe's stock it doesn't already own. Titan International, through its Titan Luxembourg S.a.r.l. subsidiary, owns a 21.7-percent share in Titan Europe, according to Titan Europe, which started life as a Titan International subsidiary before being spun off in 2004.

    Titan International earlier said the proposed acquisition presents opportunities for its tire business in South America and Europe and will cement the existing cooperation between Titan International Mining Services—established in 2011 to offer complete tire, wheel and track services near large mines worldwide—and Titan Europe's own Mining Service Centres expertise.

    Titan Europe generated $679 million in sales in fiscal 2011, split 37/63 between wheels and undercarriages. The business is largely OE-oriented with customers in the agricultural, construction, industrial and mining industries.

    The stock offer represents a premium of approximately 15.1 percent to the closing price of 111.25 pence per Titan Europe share on September 13, 2012, the company said.

    Based on the Aug. 9 closing price on the New York Stock Exchange of a Titan international share of $22.03 and an exchange rate of $1.5638 to £1—the latest practicable date prior to the date of publication of the Rule 2.7 Announcement—Titan said the offer valued each ordinary share of Titan Europe at approximately 128.1 pence per share and Titan Europe's fully diluted share capital at approximately £118.4 million. That is based on the closing exchange rate of £1:$1.5638 and the closing price of $22.03 (U.S.) per Titan international share on Aug. 9.

    The offer values each Titan Europe share at approximately 113.36 pence and Titan Europe's fully diluted share capital at approximately £104.8 million (based on the closing exchange rate of £1: $1.6016 and the closing price of $20.03 (U.S.) per Titan international share on Sept. 13—the last practicable date before the publication of the offer document.

    The company said in a press release that this assumes that all of the 4.8 million options under the Titan Europe share option scheme are exercised or cancelled pursuant to the proposals that will be made.

    The offer based on the Aug. 9 information represents, according to Titan, a premium of approximately:

    * 13.3 percent to the closing price of 113 pence per Titan Europe share on July 16;

    * 2.1 percent to the closing price of 125.5 pence per Titan Europe share on Aug. 9; and

    * 15.1 percent to the closing price of 111.25 pence per Titan Europe share on Sept. 13.

    Titan International Inc. is a holding company that owns subsidiaries primarily supplying wheels, tires and assemblies for off-highway equipment used in agricultural, earthmoving/construction and some consumer applications.

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